FOR FOREX TRADER

Forex trading strategy #1

(Fast moving averages crossover)

Trading systems based on fast moving averages are quite

easy to follow.

Let's take a look at this simple system.

Currency pairs: ANY

Time frame chart: 1 hour or 15 minute chart.

Indicators: 10 EMA, 25 EMA, 50 EMA.

Entry rules: When 10 EMA goes through 25 EMA and continues

through 50 EMA, BUY/SELL in the direction of 10 EMA once it

clearly makes it through 50 EMA. (Just wait for the current price bar to close on the

opposite site of 50 EMA. This waiting helps to avoid false signals).

Exit rules:

option1: exit when 10 EMA crosses 25 EMA again.

option2: exit when 10 EMA returns and touches 50 EMA (again it is suggested to wait

until the current price bar after so called “touch” has been closed on the opposite side

of 50 EMA).

Advantages: it is easy to use, and it gives very good results when the market is

trending, during big price break-outs and big price moves.

Disadvantages: Fast moving average indicator is a follow-up indicator or it is

also called lagging indicator, which means it does not predict the future market

directions, but rather reflects current situation on the market. This characteristic

makes it vulnerable. First, because it can change its signals any time, second –

you need to watch it all the time, third - when market trades sideways

(does not trending) with very little fluctuation in price it can give many

false signals, so it is not suggested to use it during such period