Simple Moving Average Cross-Over Forex System
I want to share my favorite forex trading system with you. This very simple trading systems gives me 250 pips a month on average.
This system consists of two basic moving averages: the 5 EMA and 200 SMA. I only trade the Euro/Dollar during the Euro and US trading sessions.
My Preferences + Trading Setup:
Currency Pair: EUR/USD
Trading Sessions: Euro and US
Preferred Timeframe’s: M5 and M15
5EMA (5 exponential moving average)
200SMA (200 simple moving average)
How the strategy works?
BUY when the 5EMA crosses the 200SMA from below.
SELL when the 5EMA crosses the 200SMA from above
1) Close the trade for 30 pips profit or better.
2) Close the trade for a loss if the EMA crosses the SMA in the oposite direction of your original trade.
Stop Loss (my preferences):
I always use a 15-25 pips stop loss (depends on market volatility)
My stop losses are usually placed above the most recent resistance level (short trades) of below support (long trades).
- Do not enter a trade on large bullish or bearish candlesticks. The risk is too high!
- Do not trade on holidays. (sideways markets)
- Do not trade before major economic news events (avoid whipsaws)
Example of Trade Entry
The 5EMA has crossed the SMA200 from above. I immediately sold the EUR/USD at the open of the next candle. The short trade hit my 30 pips target easily.
Moving Average Forex Trading Strategy Example: +49 pips
Three trading setups are shown in the picture below. 2 sells and 1 buy. The first sell trade resulted in a 11 pip loss. The second buy trade resulted in a 30 pips gain. The third sell trade also resulted in a 30 pip gain. That’s a total of 49 pips in just one trading day.