You by now, have seen and read many two(2) moving average crossover forex trading strategies. But this one here is bit different: you need to have 3 moving averages.
Why tripple Moving Avearge?
Well…
The added Moving Average helps avoid false signals commonly encountered in the standard MA crossover.
Forex Indicators Required:
- 10 EMA (fast)
- 25 EMA (medium)
- 50 EMA (slow)
Timeframes: 15 Minutes and Larger
Currency Pairs: Any
HOW TO TRADE THE TRIPPLE MOVING AVERAGE FOREX CROSSOVER FOREX TRADING STRATEGY
Buying Rules:
- When the 10 ema crosses 25EMA, and then also crosses the 50 EMA, then buy.
- Place your stop loss a few pips below the nearest swing low point.
- Use Previous Swing High Points As your take profit target level.
Exit when the fast EMA touches the medium EMA or
Exit when the fast EMA crosses over the medium EMA.
You have to wait till the current bar/candlestick has closed before taking the exit signal.
Selling Rules:
- When the 10 ema crosses 25EMA, and then also crosses the 50 EMA to the downside, then sell.
- Place your stop loss a few pips above the nearest swing high point.
- Use Previous Swing Low Point As your take profit target level.
OTHER MOVING AVERAGE COMBINATION OPTIONS
Fast Moving Average Settings for shorter time frames. (15 min – 1 hour)
- 10 EMA, 25 EMA, & 50 EMA
- 4 EMA, 9 EMA, & 18 EMA
Slow Moving Average Settings for longer time frames (1 hour – 1 week)
- 17 SMA, 14 SMA, & 21 SMA
- 5 SMA, 10 SMA, & 20 SMA
- 4 SMA, 10 SMA, & 50 SMA
SIMPLE Vs EXPONENTIAL MOVING AVERAGE
Simple Moving Averages (SMA) have more lag. SMAs are more suited for trading on longer time frames (over 1 hour). These can also be used to help identify support and resistance areas, especially the 200 SMA.
Exponential Moving Averages (EMA) have less lag. These are more suited for trading on shorter time frames (under 1 hour).
ADVANTAGES OF THE TRIPPLE MOVING AVERAGE FOREX TRADING STRATEGY
- Simple and easy to follow.
- Easy to automate.
- It is A Very profitable forex strategy in trending markets.
DISADVANTAGES OF THE TRIPPLE MOVING AVERAGE CROSSOVER FOREX TRADING STRATEGY
- Doesn’t work well in ranging markets. Can lead to numerous false signals. So You have to Avoid using this strategy during ranging markets.
- Requires monitoring after every new bar has closed. Remember to wait till the current bar has closed before taking any action. Signals can change frequently if you are watching the graph tick by tick.
Posted in