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SMA Strategy

  • #1
  • First Post: Oct 17, 2009 6:59pm Oct 17, 2009 6:59pm
I am a new trader to the forex market and was just wondering whether this system i propose work well in the long run.

-In this trading strategy, i simply place 2 Simple moving averages with parameters of 50 days and 100 days.

-I will trade only the 1 hour time frame chart and a 1 day time frame chart

-Enter when the fast SMA crosses over the slow SMA (when 50 day SMA goes crosses above 100 day SMA, I buy it to go up and sell when the 50 day SMA goes crosses below 100 day SMA)

-the 1 hour time frame is my short term trading while the 1 day is my long term position


I have been just trying to learn and create my forex trading strategy but the more complicated i make it, the more money i loose (my opinion) therefore i simply thought that SMA crossovers is the simplest way of profiting from trading.

For those experience traders out there, can you give me some feedback as to what you think? does it work? or what other strategies do you propose?
  • #2
  • Oct 17, 2009 9:24pm Oct 17, 2009 9:24pm
What I recommend is doing an intense backtest of this system, take every trade, write down the conditions of when you would have entered etc, outcomes, and see if you need to adapt your entry conditions to enter earlier/later....with h1 charts shouldn't be too hard to go back a few months, vigourously test everything and have all your results noted, maybe in spreadsheet form, to see whether it is viable.

From my experience chop will kill any crossover system alone, chop is when the market ranges for a long period of time and the moving averages keep crossing over eachother back and forth generating no good signals
  • #3
  • Oct 18, 2009 12:18am Oct 18, 2009 12:18am
Quoting Sim
What I recommend is doing an intense backtest of this system, take every trade, write down the conditions of when you would have entered etc, outcomes, and see if you need to adapt your entry conditions to enter earlier/later....with h1 charts shouldn't be too hard to go back a few months, vigourously test everything and have all your results noted, maybe in spreadsheet form, to see whether it is viable.

From my experience chop will kill any crossover system alone, chop is when the market ranges for a long period of time and the moving averages...
And if I may add, you need a different set of thinking to trade hourly and daily. Doing it together when you just starting, well, some people maybe able to. But if you're loosing money most of the time, then the best time to start picking one over the other is yesterday.

And the foremost is, Keep It Simple S.... (fill in the blank yourself) is still a sound recommendation for anyone at the beginning of his/her strategy building.

One final note: Stop asking around whether this system is good or bad, profitable or loser. Do your homework, a.k.a backtest it until your back testing you. Cos a thousand others may say "yes, absolutely," to your question, but it won't mean a thing to you during your own trade.
  • #4
  • Last Post: Oct 18, 2009 5:17am Oct 18, 2009 5:17am
Quoting wguan
I am a new trader to the forex market and was just wondering whether this system i propose work well in the long run.

-In this trading strategy, i simply place 2 Simple moving averages with parameters of 50 days and 100 days.

-I will trade only the 1 hour time frame chart and a 1 day time frame chart

-Enter when the fast SMA crosses over the slow SMA (when 50 day SMA goes crosses above 100 day SMA, I buy it to go up and sell when the 50 day SMA goes crosses below 100 day SMA)

-the 1 hour time frame is my short term trading while the 1 day...
You need to backtest it thoughrally but there are more then enough SMA/EMA cross models around that reading some threads will give you some answers.

The biggest draw back is that the indicators lag therefore it will depend on what profit limits and Stop loss parameters you incorporate. The other thing to note is that EMA/SMA cross overs work very well when there is a good trend, they are terrible during ranges because of the constant cross, therefore having a good limit for the trend times can help eleviate losses during the bad time. That said this is coming from a person who doesnt use indicators to trade, I have like most dabbled but found they are not my cup of tea so reading around as I said will give you some good pointers.

Take care, good luck

Razor
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