BEST Moving Average Strategy 2021

the strategy is called the moving

average crossoverit is a very simple and famous strategie but most traders are actually trading it the wrong way the biggest mistake that everyone makes

when trading the strategy

is every time the moving average crosses

over

they immediately take a position

when the faster moving average crosses

above the slower moving average

they immediately take a buy position

and when the faster moving average

crosses below the slower moving average

they immediately take a sell position

this is actually the worst way of

trading the moving average crossover

because using the strategy this way only

works if the market is trending

if the market is on a range like this

you will receive

so many false signals and this will wipe

out your account

very quickly the next mistake that

people make when trading the moving

average crossover

is that they use too many moving

averages remember

the more moving averages that you use

the later your entry signals will be

for example let's say you're using two

moving averages

the 20 and the 50 period so

if the 20 period crosses above the 50

period

you take a buy position here but

if you added another moving average

let's say the 200 period

then you would instead enter here which

is a much later entry

compared to if you only used two moving

averages

so the lesser the better

another mistake that people make when

trading the crossover strategy

is that they're trading it on lower time

frames

lower time frames tend to have less

trend and more range markets

so that is why most traders lose money

when trading the crossover on lower time

frames

so instead this is how i would trade the

moving average crossover

i'm only going to be using two moving

averages the 20

and the 50 period the first step

is that i would choose a high time frame

i recommend using the daily time frame

for this strategy

but if you think that that's too high

then you can just use the one hour chart

instead

next i would pick a pair

then what i'm trying to look at is how

the market is reacting to the moving

average crossover

let me show you what i mean if you zoom

out and look closely at the 20 and 50

period

you can see that the price tend to not

react to the crossover

here we can see that the moving average

crosses over downwards

but instead of following the crossover

and also heading downwards

the price instead reverses and heads

back up

and now you can see it again here the

moving average crosses upwards

but the price instead went downwards so

clearly

this market has a history of not

reacting to the crossover

and so i will not use the crossover

strategy on this market

so let's look at another pair instead

here's the euro gbp if you zoom out

and look closely at the 20 and 50 period

we can actually see that the market

tends to react to the crossover

over here we can see that the moving

average crosses over upwards

and the price followed that signal and

made an uptrend

next you can see it happening again here

the moving average

crosses over downwards and the price

made a downtrend

this has actually happened multiple

times in this chart

every time the moving average crosses

over the market tends to follow that

same direction

and so now we know that this market has

a history of following the crossover

so i will confidently trade the

crossover strategy on this market

but remember just because a market

reacted to the crossover in the past

doesn't guarantee 100 that it's going to

do that again

in the future however it will still have

a much higher chance of doing so

compared to the market that never

reacted to the crossover in the first

place

so once you identified the right market

it's time to trade the crossover

for your entry signal if the ma crosses

above the 50 ma

you take a buy position and if the 20 ma

crosses below the 50 ma you take a cell

position

and for your exit signal you can use an

exit indicator

like the atr trailing stop loss to exit

your trades

this will give a much better exit

compared to if you waited for the moving

average to cross over again

for example let's say you took a buy

position here

if you waited for the lines to cross

over again

you would have exited your trade here

and wasted so many pips

but if you had used a better exit

indicator like the atr trailing stop

loss

you would instead exit here notice that

it gave a much better exit signal

and you would have kept more pips so

that's my approach when trading the

moving average crossover

another way of using the moving average

is by trading it like support and

resistance

and another indicator that is perfect

for the strategy

is the stochastics so here's an example

on how the strategy works

in this chart we can see that the price

went up to this level

it hit and reverses downwards this

happened multiple times which further

confirms that the moving average

is acting as a resistance next

we also noticed a pattern every time

prices went up to the resistance

while the stochastics is at overbought

the price tends to reverse downwards

and now as you can see in the current

price

we are back at the resistance level

while the stochastics

is at overbought so this is a good

opportunity to take a sell position

let's look at another example in this

chart

we can see that the moving average is

acting as a support

as prices went down to this level hit

and reverses upwards

multiple times and we also noticed that

the same pattern has formed

every time prices went down to the

moving average while the stochastics is

that oversold

the price tends to reverse back up

so now as we look at the current price

you can see that it is back at the

support line

while the stochastics is that oversold

so this is a good opportunity to take a

buy position

another moving average strategy that you

can use is by combining the 200

exponential moving average

with any indicator and automatically

increase its win rate

let me give you an example if you're

just trading only using the parabolic sr

it will give you a win rate of only 38

percent

but if you combine it with a 200 ema

it will increase the win rate to 46

it also works with other indicators as

well for example the super trend

if you're trading only using the super

trend indicator it will give a win rate

of only 39

but if you combine it with a 200 ema

it can boost that win rate to 48

so adding the 200 ema with any indicator

can automatically increase its win rate

and the way you combine the 200 ema with

other indicators

is very simple if the price is above the

200 ema

you only take buy positions and if the

price is below the 200 ema

you only take cell positions so let me

give an example

if an indicator in this case the super

trend gave

a buy signal while the price is above

the 200 ema

you take a buy position but

if the super trend gave a buy signal but

the price is below the 200 ema

then you ignore this buy signal this

also works for cell signals as well

if the super trend gave a sell signal

and the price is below the 200 ema

you take a sell position but

if the super trend gave a sell signal

but the price is above the 200 ma

then you ignore this cell signal so

that's how you combine

any indicator with the 200 ema

so i just gave you the best moving

average strategy that you can implement

in your trading system right now and all

i ask for in return

is for you to take two seconds of your

time into liking the post and subscribe

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it literally takes only 2 clicks but it

means so much to me

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post as well so thank you guys

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