I have found that utilising moving averages for not only entries but reversals, take profit and of course stops has been extremely beneficial to my trading over the years. They are by no means the be all and end all to trading and I use them in conjunction with Trend, Price Action and a few other indicators/oscillators to confirm.....
I would suggest that if you do not have a good understanding of trend and price action,then, skip this post completely until you have a good feel and understanding of those key areas.
Quite alot of the time you will find that price tends to chop either side of the moving averages before heading off in either a trend continuation or reversal thus, it is always important to know the daily and 4 hourly direction whether they be trending mode or consolidation mode. Take time to analyse the price action around the moving averages and you will see that whilst you may get chopped a few times, once the trend starts to move that excellent trades evolve from these moving averages and some, such as the yen crosses may be riden for months at a time.
I coverred rules a while back, but I have found that the best way to trade the moving averages is to trade only in the direction of the overall trend when daily and 4 hourly charts are heading in the same direction or both are beginning to show/confirm reversals. ONLY ENTER ONCE PRICE HAS BROKEN AND CLOSED THROUGH (ABOVE OR BELOW) THE MOVING AVERAGE, this little jem has kept me out of quite a few bad situations..
As far as the actual entry goes it really depends on the individual. A perfect Ma entry is waiting for the break then setting your entry at the Ma enterring on a pullback. Alas, sometimes price moves too far though the Ma and never looks back. To counter this it is sometimes useful to enter a % of your trade at the close of the candle then leave your balance at the MA.. this way should the price not retrace, you will at least have something to show for your patience and time.
lets get these puppies in print.
Moving Averages - Use Close
SMA = Simple Moving Average
SSMA = Smoothed Moving Average
EMA = Exponential Moving Average
LWMA = Linear Weighted Moving Average
USDX- US Dollar Index
Daily - 200 SMA , 100 SMA , 9 EMA
4 Hourly - 220 SSMA, 55 SMA
Hourly - 200 SMA, 169 EMA
Eur/Usd
Daily - 200 SMA , 169 EMA
4 Hourly - 400 LWMA, 169 EMA
Hourly - 220 SMA, 169 EMA, 100 LWMA
Usd/Chf
Daily - 200 SMA , 100 EMA
4 Hourly - 200SMA, 72 SMA
Hourly - 752 EMA, 300 EMA, 72 SMA
Gbp/Usd
Daily - 200 SMA , 300 LWMA
4 Hourly - 400 EMA, 220 or 200 LWMA,55 EMA
Hourly - 300 LWMA, 220 LWMA
Aud/Usd
Daily - 200 SMA , 100 SMA , 20 SMA
4 Hourly - 400 EMA, 220 EMA, 55 EMA
Hourly - 400 EMA, 100 SSMA
Usd/Cad
Daily - 200 SMA , 300 EMA, 169 EMA,
4 Hourly - 300 EMA, 169 EMA, 100 SMA
Hourly - 300 EMA, 169 EMA
YEN CROSSES
Aud/Jpy
Daily - 300 LWMA, 200LWMA, 100LWMA
4 Hourly - 300 LWMA
Hourly - 300 EMA, 300 LWMA
Eur/Jpy
Daily - 200 SMA, 100 EMA
4 Hourly - 440 SMA, 300 LWMA. 130/110 ema´s
Hourly - 300 LWMA, 89 EMA
Gbp/Jpy
Daily - 200 SMA, 200 LWMA, 21 EMA
4 Hourly - 220 LWMA, 100/90 EMA´S
Hourly - 100 LWMA, 100/90 EMA´S
30 min - 200 SMA, 200 LWMA
Eur/Gbp
Daily - 200 SMA, 100 SMA
4 Hourly - 100 SMA
Hourly - 200 SMA, 100 SMA
Spot Gold - Xau/Usd
Daily - 200 / 220 LWMA,
4 Hourly - 200 LWMA, 100/90 EMA´S
Hourly - 200 LWMA
Spot Silver - Xag/Usd
Daily - 200 SMA,
4 Hourly - 220 SMA, 100 EMA
Hourly - 200 EMA, 100 EMA
Crude Oil - CL/Mnth/Year
Daily - 200 SMA, 100 SMA
4 Hourly - 300 EMA, 144/169 EMA´s
Hourly - 300 EMA
I hope you find these helpfull in your trading and by all means if you have any questions or find a different moving average that continually produces great support or resistance capabilities please let me know and I will be glad to have a look at it for you.
I will make one point.
Different platforms will sometimes produce different levels for these moving averages. Differences may occur due to incorrect or corrupt data, differing open and closing times or incorrect calculation of the various moving averages.
It is always better to have not only your trading platform up and running, but I strongly suggest that you also have at least two other platforms ( be they demo´s or not) confirming the levels that you are looking at to enter or manage a trade.Sometimes you connection may have times out, your firewall acts up, and you end up enterring at the wrong rate or you completely miss the trade entirely.
Personally I use CMC Markets and FX Pro to trade, with a Broco demo platform up along side to confirm. When you are not completely certain or a trade it is always better to err on the side of staying out or using a very very small lot size and by all means please remember.
PRICE ACTION IS KEY AND DICTATES WHERE AND HOW INDICATORS AND OSCILLATORS MOVE. IF PRICE ACTION TELLS YOU THAT THINGS DONT QUITE SMELL RIGHT THEN GET OUT OR TIGHTEN YOR STOP TO BREAK EVEN OR BETTER.
