Swing trading with MAs

Hello guys,

Does someone swing trade with MAs? It seems quite straightforward and easy plan, from my perspective, and what MAs do you use? 10/20 SMAs (as it’s shown in School)?

Do you mix MAs? Like 10 SMA and 20 EMA?

I did when I started, but I was frustrated that I often only caught a small part of the leg traded. Normally the price is well below the MA cross when it crosses. It also doesn’t work well when ranging. As I trade automated I had to define when the market was ranging (as soon as possible), which was difficult to do. So I gave it up.

Nowadays I use MAs more as a confirmation. I can’t recall what I used.

Sometimes I am using EMA but together with other indicators. It is recommended to use it together with at least two more indicators and not to make your decisions only on EMA indications.

I agree with that. MAs confirm that you were right about 5 bars too late. :slight_smile:

Hi
EMAs or MAs are very useful to trail your stop losses on daily charts, where they are very reliable.

The main importan thing is this: Dont waste your time looking for the perfect setup, if is an EMA or MA or if is a mix of both, it doesn´t matter. Trust me, thats is not what will make you profitable. You can be profitable with EMA or MA, as long as you are:

  • trading in the direction of the trend
  • cutting your losses chort
  • letting your profits run
  • using a good money managment system

This is how I use MAs: I have 3 MAs on my daily chart: 20, 50 and 200. They represent support or resistance for short, middle and long term. If I have several positions opened, I start closing my positions when price starts to break those MAs in the opposite direction of my trends.
For example lets say that I have 4 open long positions. If price breaks down 20MA I close one position and let the other 3 run, because it is usually a short counter trend and soon after the trend will reume. If prices then breaks the 50MA, I close the next 2 positions and let the last lot running for the long term trailing it with the 200MA. get it?

What I just told you will help you a lot, because exit is more important than entry. You can choose any random entry method, but if you dont know how to manage the trade then it is useless.

Hope that helps. Feel free to ask as many questions as you like. I have been trading forex for almost 10 years, and MAs are an important aspect of my system, so I am very familiar with them.

i used:
SMA 3 and SMA 9
Stochastic Oscillators 14-3-3
Relative strength index 9

time frame are 12h-4h-1h to catch the trend or reversal if any >normally would get anything around 100pips…some time used 30mins but that just me being a newbie and impatient

You have to ask yourself…

“Self, I have a question for you. Is there anything at all about MA’s that suggests they offer insight into the future market movements? If yes, what? If yes, why doesn’t everyone else do this super-simple trading strategy?”

Self may have a few terse words as a reply, but it’s probably worth listening to.

As I mostly trade on daily time frame using price action system I use 8 and 21 EMA on my daily chart to check for any dynamic support and resistance.

@PennyWorthington: Because it needs a verification from RSI, for example? :smiley:

I’m currently playing with 20/50/200 SMA on EURUSD D1, however it will continue to sell (as it’s passed 50 on RSI) and after a few days, my hypothesis is, that it will go up.


I like swing trading but I am not use indicator in my trades, usually I am prefer to analyze trend market with only use candlestick pattern on different timeframe, which my trigger on daily timeframe, moving average seems good indicator and for swing trader still used to analyze trend market.

It’s difficult to achieve swing trading with MAs since they are a lagging indicator, meaning it’s still forming while you trade. Testing this on historical data is useless since the MAs are already perfectly formed (they know which candles will appear next). Better to test this in forward demo. 50 SMA is slow and might confirm support/resistance levels, the faster ones? It’s really tough.

bearish: yep “three candles” pattern is quite good too, in my opinion, (never tried, but “backtested” the theory). I’m still thinking about Parabolic SAR, which seems okay as a trend indicator… I’ll test it.

I’m just curious about SMAs because they tend to cross themselves at D1 timeframe, just in a half of a swing, which is seems useless at D1. But at H4, H1 it seems more “successful” of indicating a trend than D1…

You got it!

I’m currently playing with 20/50/200 SMA on EURUSD D1, however it will continue to sell (as it’s passed 50 on RSI) and after a few days, my hypothesis is, that it will go up.

But, really, is there any reason why that should work, ever? Other than random luck at the times you notice?

If a trader doesn’t have a solid reason “why” something they are basing their trades on has validity then it’s all just spinning in circles. Then again, some of you only need luck, but relying on luck isn’t a robust way to go about life.

That seems pretty powerful technique, do you use some oscillators? RSI/SAR/Stochastic to support your decisions?

No, because I prefer to trade price rather then indicators. MAs are only for visual help at support and resistance levels that will help you to manage the trade.

Hi Gasanvill

I have been trading as a part time based on indicators. But not profitable. I think there are something else to get profitable. You mentioned above importance of money and exit management. Money management I have heard many times in babypips.com but how to exit rarely people talk about. Do you have some guide lines for exit management.

Hi
I don´t want to over complicate things but in general lines it depends of your style of trading:

  • If you are a scalper, your positions will last only minutes, even seconds.
  • If you are a day trader, you close all your positions the same day (no overnight holds)
  • If you are a swing trader, usually by friday you close all positions.
  • If you are a position trader, usually the trades last weeks or months.

So first you need to determine your style, because that is directly related to how long your trades last. In my case, I use a swing trading system and a position trading system, they all work the same but the exit is different:

  • On the swing trading system usually my positions are open on monday and closed on friday. So I have at the moment like 20 positions opened with 1453+ pips up this week, that I intend to close today friday. And on monday again if the trend resumes re-enter. ANd this cyclye repeats every week after week.

  • Position system, they usually last 3-6 months. Right now I have like 15,000 pips+ of unrealised profits from trades opened on december that I will let ride and start closing trades as describes in my first post.

Also, I am a trend follower trader so I don´t use a Target Profit because I want to let the trade run as long as I can in relation to my trading style.

If you are not profitable yet, maybe the problem is that you haven´t defined yet what is your style of trading.

I was going to ask this question too :smiley:

If you are a swing trader, usually by friday you close all positions.

So I can take longer swings, I suppose, right?

And I do wonder if I can just “hop on” in the middle of the swing?

Now I have tried to look at GBPUSD D1, which took a nice swing down (22. Dec. 2015 - 15. Jan. 2016) and it just went by that orange line (which represents first support) into a level where I do wait for a reverse of “nose dive”.

I wanted to open a short position a week earlier but I was skeptical (I know, my fault).


On my long term- approach, I have 4 lots on gbpusd with 1,500+ pips at the moment, the first one placed on December, and all of them have the stop loss moved to breakeven, so 0 risk on the trade now:


My plan is to keep adding lots as long as the trend is down. Then start closing the new ones as a correction begins, and letting the old ones until a bigger correction takes place. LET YOUR PROFITS RUN, I bet you heard that 1000 times, well, that is how you do it. In my long term- approach I don´t care if I get stopped out at break even on some lots, because I can add new ones, and in the end after some months I will have 15,000+ pips of profits, and only risked maybe 2,500 pips to make thoes profits.

As long as the trend goes down you can sell anytime you want. I am going to tell you a little secret that will save you hundred of hours: IS NEVER TOO LATE TO ENTER A TREND. Newbies think that because the market is oversold or overbought, then is not a good time to enter. The market can stay oversold or overbought for oversold for a huge period of time and you will miss a lot of pips if you wait for the “perfect setup”. Take a look at Eurusd and Oil on 2014, the market stayed oversold for months and I made a lot of money there selling.

Dont be afraid of “entering too late”. Ss long as the trend is still there, then you can pull the trigger. If you get stopped out then you can re enter later and maybe at a better price when the trend resumes. As I said on other post: the exit and management of the tarde is most important than the entry.

The details of entries and pairs are a little more elaborated to discuss in detail here. I am thinking to open a thread to give help to newbies and discuss my system, probably this year when I find some extra time :slight_smile:

Hi

Thank you for your advice. You are right. I have not define my trading style. I have some strategies from babypips.com and forum. They provide entry and exit rules. I follow them. Your strategy is quite different from what I have. You seems you do not have profit targets and stop/loss. This suggestion may provide an opportunity to raise my trading level. I like a swing trader based on my time, personality. You open positions on Mon and close by Friday on daily chart. How open we check price movements daily is reasonable?