Moving Average Crossover Trading Strategy – How to use Moving Average Crossover Strategy Intraday
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Moving Average Crossover Trading Strategy – How to use Moving Average Crossover Strategy Intraday


Can moving average crossover strategy make
you a profitable trader? How to trade it and make more money? What moving average strategy is the right
one? How to use this average indicator properly
without blowing up our accounts? Lets find out. Moving Average is one of the oldest and most
powerful indicator ever made. Not just because its simplicity, but it actually
shows you average price of a stock, and even shows the direction of the trend. You might have seen some business news channels
get excited when price crosses the 200 period moving average, Because it can indicate a
start of a new trend. But like i said in my Ichimoku indicator video,
the indicator that are easy to understand, can be difficult when it comes to executing
trades with it. If stock and forex trading was easy, everyone
would have been a millionaire. The moving average crossover strategy is simple,
but there are few challenges you may encounter when executing trades with it. Lets see what are they, and how to avoid them,
once we actually understand, how to use the moving average crossover strategy properly. Like always, In my next video, I will test
this strategy 100 times, to find its real win rate. I’ve already tested many other indicators
100 times, to show their real win rates. If you have not watched those videos, go watch
now. And subscribe to the Trading Rush Channel,
to see this moving average strategy, and many other strategy tested 100 times. After all, you don’t want to risk your money
on something that doesn’t even work. Here’s how this Strategy goes. Moving average crossover strategy consists
of 2 Moving averages. One is a 9 period moving average, and other
one is 21 period moving average. These moving averages can be simple moving
averages, but I recommend using Exponential Moving Averages, since they will react to
price quickly. If a big candle appears due to some news,
EMA will react to this quickly, than the slow SMA ever will. It’s because EMA gives more priority to the
latest candles, unlike SMA, where all candles are given equal priority. On this chart, the yellow line is the 9 period
EMA, and blue line is the 21 period moving average. When the 9 period EMA, crosses above the 21
period EMA, It is considered as a Buy Signal. Similarly, When yellow line, crosses below
the blue line, It is considered as a sell signal. You don’t necessarily have to use 9 and 21
period moving averages, but it is recommended since most people use it. And since most traders use this setting, they
will buy over here. If you use a different setting than what most
traders use, you will buy somewhere else, which can be good move, but not always. So use the settings that majority of the world
uses. There are multiple ways to set the stop loss
in this strategy. Once you enter a long trade, You can set the
stop loss, below the Swing low. Or set it just below the Crossover of these
moving averages. Remember to give the price, enough room to
wiggle around, otherwise your stop loss can get hit. In a long setup, If you set your stop loss
below the swing low, there is low probability of price hitting your stop loss. But then price have to make a big move up,
so you can get a good risk to reward ratio. On the other hand, if you set your stop loss
just below the moving average crossover, your stop loss will have a high chance of getting
hit, but also will have a higher chance of making a big move up, relative to your stop
loss. In other words, you will have a good risk
to reward ratio. Okay! Now lets talk about the profit target. Something every trader loves. But where should we set our profit target
in this moving average strategy? Just like the stop loss, there are different
ways to set profit targets. Some use a fixed target. For example, some will set their profit target
2 times more than the risk. This way, they will only take 200 percent
profit. Nothing more, nothing less. This is a good strategy to get consistent
profit. On the other hand, some will take profit,
and exit the trade, when another moving average crossover is generated. This way, they have a chance to stay in a
long trend for a long time. This strategy can generate great risk to reward
ratio, but market doesn’t make big moves every-time. These both methods have their advantages and
disadvantages. It really comes down to the traders personality. If you can stare at the screen for a long
time, and keep adjusting your trade, go with the second method. If you cannot stare at the screen and see
your profit loss changing, go with the first method. That way you don’t have to sit to adjust the
trade. Just set your stop loss and profit target,
and go for a walk, or maybe look for another trade. Just remember to cancel your stop loss, when
your profit target order hits, and vice versa. Lets see some examples first, and then I will
show you a way to filter false signals generated by this crossover strategy. In this long setup, the 9 period moving average
is crossing above the 21 period moving average. Our entry would have been at the crossover,
and our stop loss would have been at the swing low, or just below the crossover. If you would have used the fixed profit target
strategy, you would have exited this trade right here. Otherwise, our exit signal was this crossover. Here’s a Short example, The yellow line is
crossing below the blue line. Our entry would have been at the crossover,
and stop loss above the swing high, or above the crossover. For profit, you would have exited the trade,
at the next moving average crossover, or at your fixed profit target. As you can see, there are quite a few signals,
that did not worked. In other words, these were false signals. As i always say, no strategy works 100 percent
of the time, but we can try to reduce the number of false signals, and increase the
win rate of this strategy. In this strategy, to filter false signals,
we will use the 200 period exponential moving average. You can use SMA too if you want. We will use this 200 period moving average
to find the direction of the long term trend. Remember, trend is your friend. Always take trade in the direction of the
trend, especially if you are new. If the price is above the 200 period moving
average, we will only look to buy. And if price is below the 200 period moving
average, we will only look to sell. So, here’s how our modified Moving average
crossover strategy goes. When price is above the 200 period moving
average, and we see the 9 period moving average, crossing above the 21 period moving average,
we will buy as soon as the crossover happens. Similarly, when the price is below the 200
period moving average, and we see the 9 period moving average, crossing below the 21 period
moving average, we will sell as soon as the crossover happens. Now lets take a look at some important points
and mistakes, that you should avoid, while trading with moving average crossover strategy. Number 1, To increase your chances of winning,
take trades that are near the support and resistance. I’ve already made a video on how to draw support
and resistance like a pro, check that video out if you are new. In my last video, I showed you how I was able
to make 1000 percent profit, using simple support and resistance. So use support and resistance with moving
average crossover, to increase your win rate. Number 2, Don’t take trade, if the entry signal
candle is far away from the crossover. If the price makes a big move, and then you
get a entry signal, do not take the trade. Your risk will be too much, And win rate of
that trade will be low. If price has already made a big move in one
candle, how much higher you expect it to keep going? Only take trades signals that are near the
moving average crossover. This way you will get better entry, and will
have a higher chance of getting good risk to reward ratio. Number 3, this strategy, just like most strategies
out there, works best when market is trending. In my previous videos, I showed you how to
identify if the market is trending or not, using the ATR indicator. Check that video out, if you don’t know how
to identify a range market to avoid losing money. Range market is where most traders fail, and
blow up their accounts, because most strategies stop working in a range market. If you manage your money first, and gain experience,
you should be able to identify trending and ranging market, without using any indicator. That’s all there is to it. In my next video, I will test this strategy
100 times, to see if this strategy is profitable or not. Subscribe to the channel if you want to see
it. Or maybe check out other videos, where I tested
MACD, RSI, and many other strategies 100 times, to show their real win rates. After all, you don’t want to risk your money,
on something that doesn’t even work. Like the video if you liked it. Subscribe now for more trading videos, and
don’t forget to ring that notification bell as well, so you don’t miss any future video. Thanks.

About Ralph Robinson

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4 thoughts on “Moving Average Crossover Trading Strategy – How to use Moving Average Crossover Strategy Intraday

  1. good one, looking for video on how to select stocks for intraday, think that helps lot of beginners like me to gain confidence

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