Monday, June 23, 2008

MOVING AVERAGE CROSSOVER STARATEGY!

Trading systems based on fast moving averages are quite easy to follow. Let's take a look at this easy system.
Currency pairs: ANY ONE YOUR CHOICE
chart time:1 hour or 15 minute chart.
Moving averages: 10 EMA, 25 EMA, 50 EMA.
Entry rules: When 10 EMA goes through 25 EMA and continues heading for the 50 EMA, BUY/SELL in the direction of 10 EMA once it clearly makes it through 50 EMA. (Just wait for the current price candle to close on the opposite side of 50 EMA. This waiting helps to avoid false signals).
Exit rule: exit when 10 EMA crosses 25 EMA again.
or exit when 10 EMA returns and touches 50 EMA (again it is wise to wait until the current price candle after so called “touch” has been closed on the opposite side 50 EMA)






Advantages of this strategy:
1.it is easy to use
2.it gives very good result expecialy in a nice trending market.
3.you can expect a big price move except for the intervention of news.
Disadvantages of this system
1.The ema as an indicator is a slow indicator or a lagging indicator.
2.Does not do well in sideways trending market that is it should not be used in a non trending market because it will often give many false signals in that kind of market
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