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Trading Strategy


Moving Average (MA) and MACD Trading Strategy


Aim this forex blog page about trading strategy from forex friend loan. Trade with moving average (MA) and MACD trading strategy. Successful forex trading requires building a good trading strategy. It might take a little while to fix and improve different time frame. There are several technical indicators exist for forming the strategy. Here are given a simple, reliable and forex trading strategy. I have been using this trading strategy since 2016.

It does not matter which trading strategy to trade, It's all about managed trade and sticks to one trading strategy.

I HAVE NOT FAILED, I JUST FOUND 10,000 WAYS THAT WON'T WORK - Thomas Alva Edison

Trading Forex requires learning technical analysis for currency pair price. Many technical indicators exist that can be used for technical analysis. In the forex trading strategy presented here, I am using two main indicators that are used as confirmation of the price trend.

Learn to trade forex with Simple Moving Average Crossovers (MA) and MACD trading strategy. In theory, trend trading is easy. All you need to do is keep on buying when you see the price rising higher and keep on selling when you see it breaking lower. In practice, however, it is far more difficult to do this successfully. The greatest fear for forex trend traders is getting into a trend too late, that is, at the point of exhaustion. Yet despite these difficulties, trend trading strategy is probably one of the most popular styles of trading because when a trend develops, whether on a short-term or long-term basis, it can last for hours, days and even months.

“PRICE ALWAYS MOVES WITH THE TREND”

Here blog page will cover a strategy that will help you get in on a trend at the right time with clear entry and exit levels.

This strategy that detects optimal times to buy dips and sell peaks to catch new-forming trends. The strategy is simple but very powerful and is based on Simple Moving Average Crossovers and the MACD indicator.

When the crossover trend detects at optimal times to enter trades, as well as when a trader should potentially exit trades to optimize net gains.

The strategy is used primarily for the 15 minute, 30 minutes, 1 hour, 4 hour and daily time-frames. However since I used the same trading strategy based on my forex trading experience, higher time frame like 4 hour and daily are higher profitable.

With this trading strategy, you can take advantage of little trends and big trends by entering positions immediately after a “moving average crossover”, giving you an opportunity to minimize your risk while giving yourself an excellent opportunity to scalp pips out of the market as the price moves in the new trend direction that has been newly established, as well as catch big moves that can generate hundreds of pips.

HOW TO USE STOCHASTIC OSCILLATOR

It’s this awareness of how the market continually changes trend direction, which inspired me to create a trading strategy that identifies entry points with a high probability of success. It also provided me with the opportunity to scalp pips from the market with very little risk exposure to my account.

This trading strategy can generate excellent trade opportunities for you, which you can take advantage of time and time again. Simple to use and utilizes two popular indicators that enable you to:

1. Identify potential changes in the trend

2. Take advantage of high-probability entry points

3. Minimize your risk with optimal stop loss levels


TRADING STRATEGY  COMPONENTS


Moving Averages (MA)


Moving Averages are popular indicators for trading because they accurately represent the average of price over the last set number of bars. The smaller the number of bars, the faster the Moving Average will respond to the current price. The greater the number of bars, the slower the Moving Average will respond to the current price.

The Moving Average Indicators accurately represent the average of price over the last set number of bars and indicates whether the price, on average, is rising or falling. There are several possible settings available for Moving Averages and although Moving Averages can be used in different forms with 3, 4 or more Moving Averages, all using different settings on the chart simultaneously, in this system, we are using only 2 Moving Averages; a 7 period moving average & 21 periods moving average, both based on the close price.

TRADING FOREX WITH MOVING AVERAGE INDICATOR

The easiest manner in which to use Moving Averages is to judge the slope of the Moving Average. If the slope is upwards, then while the price closes above the Moving Average, it is believed that price is being supported in an upward trend. If the slope is downwards, then while the price closes below the Moving Average, it is believed that price is under pressure in a downward trend.

However, in this trading strategy, we are particularly interested in the exact time that the trend is potentially changing. In other words, changing from an uptrend to a downtrend, or changing from a downtrend to an uptrend.

To determine this event, we use a specific point called The Moving Average Crossover (the “crossover”). This is the point when the fast moving average crosses the slow moving average. It is this point that provides traders with the opportunity to catch a movement from the inception of a new trend.

When the fast moving average is below the slow moving average, the price has moved from being supported to being under pressure.

When the fast moving average is above the slow moving average, the price has moved from being under pressure to being supported.

The following is an example of an upward trend that was confirmed by the Moving Average Crossover with the Fast Moving Average crossing over the Slow Moving Average. The upward trend remained intact while the Fast Moving Average remained above the Slow Moving Average, with the price being viewed as supported.

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The slope of the Fast Moving Average is strongly upward at the time of the crossover and the price stays above the Slow Moving Average line for most of the time, although it touches and bounces off it a couple of times throughout this move, using the Moving Average as a line of support.

The following is an example of a downward trend that was confirmed by the Moving Average Crossover with the Fast Moving Average crossing below the Slow Moving Average. The downward trend remained intact while the Fast Moving Average remained below the Slow Moving Average, with a price being viewed as under pressure.

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The slope of the Fast Moving Average is strongly downward at the time of the crossover and the price stays below the Slow Moving Average line for most of the time, although it touches and bounces off it once throughout this move, using the Moving Average as a line of resistance.



MACD (Moving Average Convergence Divergence Oscillator)


The Moving Average Convergence/Divergence Oscillator (MACD) is one of the simplest and most effective momentum indicators available. It was developed by Gerald Appel in the late seventies and it's still one of the most popular and most used indicators.

The MACD Histogram is the vertical bars and is used in conjunction with the Moving Average Crossover to determine valid changes in trend.

The black line that follows the histogram’s movements is called the Signal Line and some traders like to use this as further confirmation but for this strategy, it is not used.

DOUBLE YOUR PROFIT WITH MOVING AVERAGE CONVERGENCE/DIVERGENCE (MACD)

The MACD Indicator builds on the power of the original MACD Indicator by adding a simple-to-use color histogram that accurately represents swings in price on a dynamic basis. Since this strategy primarily uses the MACD Histogram, we've developed it so that it displays as follows:
  • When the Histogram is moving up, it will turn green
  • When the Histogram is moving down, it will turn red

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The MACD settings we use is;
  • Fast EMA 5
  • Slow EMA 13
  • Signal EMA 7

Here's a closer look at the components of the Moving Average (MA) and MACD Trading Strategy:

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The Zero Line is the invisible horizontal line that separates up and down histogram bars.

The Histogram is the green and red bars that represent price and their nature relative to the average highlighting price moves in that direction.

The Signal Line is a representation of an average price.

A guideline on how to interpret the MACD is as follows;
  • When the histogram bars are below the Zero Line, the price is considered to be under pressure and potentially falling.
  • When the histogram bars are above the Zero Line, the price is considered to be
  • Supported and potentially rising.
  • Green Histogram Bars below the Zero Line represent a move up, contrary to a price is under pressure and can be used to detect counter up moves.
  • Red Histogram Bars above the Zero Line represent a move down, contrary to
  • The price being supported and can be used to detect counter down moves.

CONCLUSION
Congratulations on finishing this blog page. You are now on your way to using Moving Average (MA) and MACD Trading Strategy for your trading in identifying excellent entry points within existing trends.

Remember; Stick to the rules, use good money management and be consistent.

Forex Trading Strategy