any idea about what is SMA(200) playground in FX? shall we consider this when placing a position? some people says that ‘don’t buy below SMA(200) and don’t sell over SMA(200)’, but I’m personally disagree with this. do you have any idea what is the SMA(200) accurately playing role in our trading and opening position with or without confirmation of SMA(200)?
any idea?
In my opinion, a moving average is simply 1 of 100 components needed to make a decision to trade or not to trade.
I’d put my focus more on std dev’s and mean reversion- but that’s just me.
You are on the right track! So, don’t follow any trading tool without validation of market context; yes SMA200 is a popular tool, but you have t understand the whole scenario of market!
200MA is sometimes used as part of confirmation of price trend but, as suggested above, price can sometimes be bullish below the 200 and sometimes bearish above it. So you definitely can buy below and sell above - but you had better have some really really strong evidence to make it worth the risk.