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It is method is extremely simple and makes it possible to benefit from great movements. Indeed, moving average is indicators of tendency. To apply this strategy, it is enough for you to choose 3 moving average. That can be for example the MM20,50 and 100 or the MM7,14,21. They are the groups of moving average most often used. The more the moving average is parameterized over one short period, the more sensitive it will be to the variations of course and will change direction quickly. The choice of moving average used thus depends on your style of trading. For a trading short term, privilege moving average short in order to obtain a maximum of signals. The risk is then to obtain a large number of false signals. It is thus with you to choose.

Application of the method

Point entrance: When the moving average shortest crosses with the fall or the rise the two others, it is then necessary to return in the direction of the movement. To avoid the false signals, wait until the candlestick on your timeframe is enclosed before returning on the market.

Point exit: The position closure is made when the moving average shortest recrosses in the other direction two other moving average.

Summary

Advantages: facility of use; possibility of programming an automatic trading; allows to benefit from great movements
Disadvantages: ask time especially if the timeframe used is small. It is indeed impossible to establish a level of exit has the advance; Number important of false signals.

3 comments

Richa Jain said... @ May 14, 2014 at 4:58 AM

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Fendy Chia said... @ August 5, 2014 at 6:20 AM

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