Strategy around the moving average

Beginner Questions
1

Hello everyone
I am trying to build a simple strategy around the moving average.
I am using, for example, two periods of EMA 15 and 50. This is offering a way to know the trend. And I think that I an not doing bad.
My questions are:

  • Where to put the stop loss?
  • Where to enter the position?
  • Where to leave?
    Anyone has some examples, please?
    Thank you in advance
2

I assume we’re talking about daily MA’s.

I use a similar pair of averages to identify trend - using the 15 and 50 as in your case, I would CONSIDER taking buy signals if the 15 and 50 are both sloping upwards AND the 15 is above the 50. I never use the MA crossover as a signal.

But I would also look at -

  1. how the weekly bars have behaved compared to the 50 in the last 3 months, e.g. how many recent bars have been consecutively bullish? how many have closed above the 50? was last week’s close near the top of the week’s range etc.
  2. what are the other pairs doing which are based on the same currency? e.g. I don’t want to go long GBP/AUD when GBP/NZD is bearish: I don’t want to go long when GBP/AUD and GBP/NZD are bullish bit all other GBP pairs are bearish.

A valid entry signal might be any kind of bullish pattern - x closes above the 15, a close above a swing low above the 50, a hammer or hanging man. I don’t think it really matters.

A stop could be based on TA - e.g. a stop for a long might be below the low of the last swing low, or it could be a close below the 50, or a close when the 50 turns downwards, or 2 or 3 or 4 or 5 ATR20 away from entry or whatever.

Good luck with this.

2 Likes
3

@tommor Thank you for those details, I will try that
So far I was dealing with 1h chart

4

It’s better using higher time frame, like 4h for a better trading signal.

5

Traders customarily place stop-loss orders when they initiate trades. Initially, stop-loss orders are used to put a limit on potential losses from the trade. For example, a forex trader might enter an order to buy EUR/USD at 1.1500, along with a stop-loss order placed at 1.1485.