FX:GBPUSD   British Pound / U.S. Dollar
Step #1: Plot on your chart the 20, 50 & 100 SMA
The first step is to properly set up our charts with the right simple moving averages so we could be able to identify the SMA crossover at the later stage. The simple moving average strategy uses the 20, 50 and 100 periods SMA .
Most standard trading platform come with default moving average indicators so it should not be a problem to locate the SMA either on your MT4 platform or Tradingview.
Step #2: Wait for the 20 SMA crossover and A - for the price to trade above the 20 and 50 SMA or B - for the price to trade below the 20 and 100 SMA .
The second rule of the simple moving average strategy is the need for the price to trade Bullish - above both 20 and 50 simple moving averages and secondly, we need to wait for the SMA crossover which will add more weight to the bullish case.
We refer to the SMA crossover for a buy trade when the 20-SMA crosses above the 50-SMA in this trade.
Opposite is true for a bearish trade - price is below both 20 & 100 sma and the 20 SMA cross below 100 SMA . We refer to the SMA crossover for a sell trade when the 20-SMA crosses below the 100-SMA in this trade.
By looking at the SMA crossover we create an automatic buy and sell signals.
However, since the market is prone to do a lot of false breakouts we at Trading Strategy Guides need more evidence than just a simple SMA crossover. At this stage, we don’t know if the bullish/bearish sentiment is strong to push the price further after we buy/sell so we can make a profit.
To avoid the false breakout we added a new confluence to support our view which brings us to the next step of the simple moving average strategy.
Step #3: Wait for the zone between 20 and 50 SMA or the 20 and 100 SMA to be tested again (break-hook-go), then look for buying/selling opportunities.
The conviction behind the simple moving average strategy relies on multiple factors to confirm a new trading idea. After the SMA crossover happened, we again need to exercise a little bit more patience and wait for a successful retest of these zones.
The successful retest of these zones gives the market enough time to actually develop a short term trend and protect you from a failed attempt.
Note* When we refer to the “zone between 20 and 50 SMA or 20 and 100 SMA” we actually don’t mean that the price needs to trade in the space between the two moving averages.
We just wanted to cover the whole price spectrum between the two SMAs because the price often times will only briefly touch the shorter moving average (20-EMA) which is still a successful retest.
Step #4: Buy/Sell at the market when we retest the zone and complete the break-hook-go.
Step #5: Place the protective Stop Loss 20 pips below the crossover candle.
Step #6: Take Profit once we break and close below the 50-SMA or above the 100 SMA . Or a predetermined sup/res level.
Comment: Bearish Breakout
Comment: Bullish fib pullback setting up bearish 2nd entry
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