crossover simple moving average (sma) strategy for more earning

Crossover Simple Moving Averages (SMAs)

The Crossover Simple Moving Average (SMA) strategy is a popular method used by traders to identify and capitalize on trends in the market. The strategy is based on the idea that by using multiple SMAs, traders can identify trends at different time frames and make profitable trades.

The Crossover SMA strategy involves using two or more SMA indicators, each with a different period, to identify trends in the market. The most common period used is the 50 period SMA and the 200 period SMA, but traders can use different periods to suit their trading style. By comparing the different SMA indicators, traders can identify when the market is trending and make trades accordingly.

One of the key advantages of the Crossover SMA strategy is its ability to identify trends at different time frames. By using multiple SMAs with different periods, traders can identify trends at both short-term and long-term time frames. This allows traders to enter trades at an early stage, when the potential for profit is greatest, and also to hold the trades for a longer period to maximize earnings.

Another advantage of the Crossover SMA strategy is its simplicity. Unlike other Forex trading strategies, which can be complex and difficult to understand, the Crossover SMA strategy is easy to implement and understand. This makes it a popular choice for both novice and experienced traders.

To implement the Crossover SMA strategy, traders first need to set up their charting software with the appropriate SMA indicators. The most common period used is the 50 period SMA and the 200 period SMA, but traders can use different periods to suit their trading style. Once the indicators are set up, traders can begin to look for trading opportunities.

When the 50 period SMA crosses above the 200 period SMA, it is a signal to buy. Conversely, when the 50 period SMA crosses below the 200 period SMA, it is a signal to sell. Once a signal is generated, traders can enter their trade and set their stop loss and take profit levels accordingly.

Traders can also use additional indicators, such as the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD), to confirm trade signals and improve the accuracy of their trades.

The Crossover SMA strategy is suitable for all level of traders, whether you're a novice or an experienced trader. It's easy to implement and understand, and its flexibility makes it suitable for trading multiple currency pairs and time frames. Additionally, by using multiple SMAs, traders can identify trends at different time frames and make profitable trades.

Chart : 1 hour (H1) or 15 Minutes (15M)

Indicators : SMA 7, SMA 14, SMA 21

Entry Conditions

When the SMA 7 crosses the SMA 14 and continues through the SMA210, a BUY / SELL signal is generated in the direction the SMA 7 is moving.

For example, if the indicator is moving down and crosses the other two indicators (SMA 14 and SMA 21) from top to bottom, a SELL signal is generated.

If the indicator is moving from the bottom up and crosses the indicators from the bottom up, it would be generating a BUY signal.

Always wait for the current candle to complete to confirm the signal. This to avoid false alarms.

Exit Conditions

When the EMA 7 crosses or slightly touches the EMA 21.

Advantage

It is also very easy to use and provides excellent results in conditions in which the market is trending strongly up or down. It's easy to automate too.

Disadvantages

Like most indicators, SMAs are a lagging indicator, and when the market is not trending clearly, it can generate many wrong signals. It also requires constant monitoring for signals.

In conclusion, the Crossover Simple Moving Average (SMA) strategy is a powerful method for traders to identify and capitalize on trends in the market. Its ability to identify trends at different time frames and simplicity make it a popular choice among traders. By combining the Crossover SMA strategy with additional indicators, traders can confirm trade signals and improve the accuracy of their trades, which ultimately leads to more earning potential. Additionally, its flexibility makes it suitable for traders who prefer to trade multiple currency pairs and time frames.