Hello FX men, How do you set your moving averages? I trade on the daily time frames with Simple Moving Average parameters as 5SMA and 10SMA with other confirmation tool. It worked on back testing and live testing as well. I read somewhere that setting SMA parameters as 10 & 5 doesn’t work . I need your views big men.
How to set a MA duration should be indicated by the strategy you wish to use them for. In this way, the job tells you what tool to use, you don’t select the tool and then look for a job.
If you do wish to use MA’s, they are best as trend confirmation and trend strength indicators. You can use a cross-over as confirmation of a trend, but not a reversal signal into a trend. Of course a confirmation signal comes later than a reversal signal, but maybe you want to use a strategy designed to get you into an already established trend, not in at the very start on a reversal.
In this case, make sure your longer MA is at least 2x the duration of the shorter MA. You can use the crossover as an entry signal but do not try holding until you see the opposite crossover: this pairing of opposite signals is why MA crossovers and MA’s in general get a bad reputation.
Don’t ignore the direction of the longer MA’s slope.
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