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MA Crossover System that works for me

  • #621
  • Apr 12, 2023 11:55am Apr 12, 2023 11:55am
As an example this graphic of USD / CAD today: 8, 21 and 100 MA are all going down, there is a bearish MA crossover on the 4H TF, there was a green candle pullback and then again red candles with the last one having a lower high again. We are approaching quite a resistance area which might not be good to trade. I would dare to go for a small trade here, do you see any good entry level here? Where would you put in in accordance with your strategy?
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  • #622
  • Apr 13, 2023 1:54am Apr 13, 2023 1:54am
Quoting Uru-trader
Hi Alistarir, just having started and finishing my 4 week practise on the demo account witha total return of 5,5%, I will be starting my live account in the coming days. Reading this thread I recognize the logic I have been using for my winning trades, but writing it down I do have some difficulty in defining the strategy. As I understand it: after a MA crossover you do not open a trade but you wait for a pullback candle (e.g. in UP-trend, you wait for a candle with a lower high) and then as a confirmation on the trade the pair will need to go a...
Well done - 5.5% in a month is good. But remember that trading with real money is more difficult because there is more psychological pressure. So start with small amounts and get used to experiencing losses of real money.

After a crossover is a good place to look for an entry, as long as the trend is with you. Use the safety checklist I posted earlier in this thread. The important thing is to enter close to the 8 and 21 EMAs and when those two or sometimes all three EMAs are close to each other. As soon as any spaces open up it tells us that price is overbought/sold, or 'stretched' away from the EMAs and almost always you will get a pullback.

This chart (GBPUSD H4) shows a new trend and the places you could enter. Notice that the 100 EMA shows that a strong trend has formed - when the candles and the 8 and 21 EMAs keep a steady distance away from the 100 EMA it suggests that you can enter after many of the pullbacks. But this is a selected, perfect case. Mostly it is not this clear.

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  • #623
  • Apr 13, 2023 2:11am Apr 13, 2023 2:11am
Quoting Uru-trader
As an example this graphic of USD / CAD today: 8, 21 and 100 MA are all going down, there is a bearish MA crossover on the 4H TF, there was a green candle pullback and then again red candles with the last one having a lower high again. We are approaching quite a resistance area which might not be good to trade. I would dare to go for a small trade here, do you see any good entry level here? Where would you put in in accordance with your strategy? {image}
I was actually in a trade on this pair - see post #619. Then I saw that there were big news releases due on both USD and CAD, so I closed manually for a small profit. And see how volatile the next few candles were.

I marked up this chart showing possible entries. The one I used was before the two EMAs crossed over, but there was a strong downtrend on the daily so I was confident about going in a bit soon, using a sell stop order.
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  • #624
  • Apr 13, 2023 7:05am Apr 13, 2023 7:05am
Thanks Alistair, can you confirm whether my description of the strategy when to open the trade is correct?
I did not do the USD/CAD but it looks like it would have turned out profitable
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  • #625
  • Apr 13, 2023 7:57am Apr 13, 2023 7:57am
This chart shows a typical sequence of events around a reversal. Firstly, note the previous trend slowed down and went into a range, or consolidation. Be sure to mark out that range as soon as you see it forming, e.g. no higher highs is a sign of something going on.

This is easy and obvious after it has happened. Noticing and acting on it is not easy when doing it live.

#1. The 8 and 21 EMAs cross down, but that has happened a lot recently and it is still within the range on the left, so don't act on this, just notice it.
#2. Price breaks below the 100 EMA. This is a sign that the uptrend has ended. You can enter here by placing a sell stop order below the 100 EMA but it is an aggressive style and more risky. A more conservative approach is to wait until all three EMAs are aligned.
#3. The 8 EMA crosses below the 100 EMA, definitely time to get interested, but note that there is a big open space opening up between price and the EMA, so a pullback is very likely - wait for that pullback. The pullback might be a small one, in line with the other candles (e.g. an inside bar or two-bar pullback) or it might be a multi-bar pullback.
#4. The 21 EMA crosses below the 100 EMA, so all we must do is find the best entry point. So we should notice that the pullback has taken place, the EMAs are aligned, price is very close to the 8 and 21 EMAs, even inside the envelope between them, so if there is nothing else getting in the way, like a support level, then place a sell stop order below the 8 EMA. We use a stop order to avoid having the trade triggered and then going the wrong way. The better trends are when price dances down the outside of the 8 EMA (or up in an uptrend), so we wait for price to break out. I have marked a place for the sell stop order at the base of the green bar so that the price level is not near the order at that time. Don't chase price, but wait for it to move outside the EMAs.
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  • #626
  • Apr 14, 2023 2:31am Apr 14, 2023 2:31am
One of today's trades. It's a bit further away from the actual crossover than I would like, but not too far. I placed the sell stop order below the third bar back (the green one) to make sure the order was not close to the price level at the time. This has worked in my favour because price has continued up but the trade is not yet triggered (it came very close, but not yet).
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  • #627
  • Edited 4:29am Apr 15, 2023 3:58am | Edited 4:29am
this approach is very similar to one of my systems that I use. I simply go forward based on the signals of the crossover. The change of direction may occur several times a day, but this is included in this strategy.
I have a rule, I don't trade during news. The big advantage of this strategy is that I don't have to predict the prices, I just go with the trend.
no unnecessary stress.
good luck for everyone.

  • #628
  • Edited 10:01am Apr 16, 2023 4:21am | Edited 10:01am
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  • #629
  • Apr 17, 2023 3:32am Apr 17, 2023 3:32am
Quoting tiborf71
this approach is very similar to one of my systems that I use. I simply go forward based on the signals of the crossover. The change of direction may occur several times a day, but this is included in this strategy. I have a rule, I don't trade during news. The big advantage of this strategy is that I don't have to predict the prices, I just go with the trend. no unnecessary stress. good luck for everyone.
Sounds interesting toborf71, thanks for posting. Could you show us some examples of your trades so we can see what you do?
  • #630
  • Apr 17, 2023 10:28am Apr 17, 2023 10:28am
Quoting AlistairC
{quote} Sounds interesting toborf71, thanks for posting. Could you show us some examples of your trades so we can see what you do?
no rocket science. I simply go forward according to the signals of the crossover, when a signal comes, I immediately open a position. I trade several pairs at the same time. There are also losses, but I solve them with good financial management.
  • #631
  • Apr 17, 2023 12:50pm Apr 17, 2023 12:50pm
Interesting! Personally, using MA crossover + confirmation, this week for example I see very few buying opportunities.
So indeed, trading merely on the crossover might be worth trying.
Which timeframes would you consider adequate? Anything less than 1 hours seems very unreliable to me?
  • #632
  • Apr 17, 2023 1:11pm Apr 17, 2023 1:11pm
Quoting Uru-trader
Interesting! Personally, using MA crossover + confirmation, this week for example I see very few buying opportunities. So indeed, trading merely on the crossover might be worth trying. Which timeframes would you consider adequate? Anything less than 1 hours seems very unreliable to me?
I don't think all pairs are suitable for trading with this strategy. I think it's the best.
aud/cad, eurcad, eur/nzd, eur/usd, nzd/chf.
and you need a good MA crossover that doesn't repaint often.
H1.
  • #633
  • Apr 17, 2023 1:31pm Apr 17, 2023 1:31pm
AUD/CAD is on the verge of a MA crossover on the 1H chart, so according to your system a possible BUY.
Would you go for it despite being underneath the 100 MA or would you say this chart does not offer a 'convincing' crossover?
Can you elaborate on what type of crossover would convince you?
Thanks for sharing this, very useful!
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  • #634
  • Edited 2:04pm Apr 17, 2023 1:44pm | Edited 2:04pm
Quoting Uru-trader
AUD/CAD is on the verge of a MA crossover on the 1H chart, so according to your system a possible BUY. Would you go for it despite being underneath the 100 MA or would you say this chart does not offer a 'convincing' crossover? Can you elaborate on what type of crossover would convince you? Thanks for sharing this, very useful! {image}
try playing with the defaults, it can help a lot, because I see that this crossover is very late.
as for 100 MA, I don't use it.

I've been long AUD/CAD since morning.

H1.
  • #635
  • Apr 17, 2023 2:22pm Apr 17, 2023 2:22pm
Ok Tibor, I go for the challenge. I put my crossover sharper, indeed this would have me open the trade a lot sooner.
I had already opened this one at 0,8977 aiming at the MA-100 level, so 15 pips.
This is on my demo-account, I know the 1:1 risk is no good, it's just a test
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  • #636
  • Apr 18, 2023 2:11am Apr 18, 2023 2:11am
Quoting tiborf71
{quote} no rocket science. I simply go forward according to the signals of the crossover, when a signal comes, I immediately open a position. I trade several pairs at the same time. There are also losses, but I solve them with good financial management.
Thank you for this. I suppose you don't trade every crossover that appears. How do you decide which ones to take and which ones to ignore? And for interest, which MAs do you use?
  • #637
  • Apr 18, 2023 3:09am Apr 18, 2023 3:09am
Quoting AlistairC
{quote} Thank you for this. I suppose you don't trade every crossover that appears. How do you decide which ones to take and which ones to ignore? And for interest, which MAs do you use?
The reason I am asking Tibor how he does this is because I have a way (see below) of deciding which crossovers to trade and which to ignore, and I would be keen to hear how Tibor does it.

The chart shows the end of a downtrend on the left, then the usual period of confusion / consolidation, followed by an uptrend. On the left I would trade only the red arrows (bearish EMA crossovers) and on the right I would trade only the green arrows. I find the 100 EMA very helpful for being sure about the trend. I prefer to wait until everything (i.e. price bars and the 8 and 21 EMAs) has moved to one side of the 100 EMA or the other. The left side and right side of the chart are easy to see but the main challenge (as with all trading) is to avoid trading the mess in the middle.
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  • #638
  • Edited 6:33am Apr 18, 2023 6:14am | Edited 6:33am
Quoting AlistairC
{quote} Thank you for this. I suppose you don't trade every crossover that appears. How do you decide which ones to take and which ones to ignore? And for interest, which MAs do you use?
I recommend you search among the crossovers, because there are plenty of them. from the simple to the ones with more input data.

mine has several input data, not just plain MA.

I use mine in such a way that I wait for two or three candles on the path of the signal to make sure the signal is good.
  • #639
  • Apr 18, 2023 3:56pm Apr 18, 2023 3:56pm
Is this just my impression, I can't seem to any decent trades this week. What do you guys do in these circumstances? Just wait and perhaps no trading for a whole week or do you consider that you are not looking hard enough, there's money in the market any time??
  • #640
  • Apr 19, 2023 2:03am Apr 19, 2023 2:03am
Quoting Uru-trader
Is this just my impression, I can't seem to any decent trades this week. What do you guys do in these circumstances? Just wait and perhaps no trading for a whole week or do you consider that you are not looking hard enough, there's money in the market any time??
The short answer is that you are right, there haven't been many suitable trades this week that suit an MA crossover, trending market strategy. You could go looking in the lower time frames - what looks like consolidation on the daily might be beautiful big trends on M15.

It does sometimes seem as if the entire forex market goes to sleep, or large parts of it. This might happen before a major economic news release or when there is a major event that could affect world trade. We call this a "risk off" market. https://www.babypips.com/forexpedia/risk-off

Other times the market might be active, just behaving in a way that does not meet the criteria of our particular trading strategy, for example, the MA crossover system we use here is very much a trend trading system, so when markets are ranging, they might still be active, but just not the way we like it. So you could drop to lower TFs as mentioned earlier, or use different strategies that suit what the charts are doing.

Further, I use a more conservative MA crossover approach where I like to include the 100 EMA in my "package" of EMAs. But that slows things down. If you use just two smaller-number EMAs (e.g. 8 and 21), then you will get many more crossovers, but with a lower probability.
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