5 – 10 sma crossover is a most simple trading strategy
Using two simple moving averages to keep track of what is happening on 30 Forex pairs saves a lot of time in inspecting charts to look for trend changes.
The Forex pairs are often offering long trends and are lucrative for trend followers.
Using the 5 – 10 crossover scan to detect changes on the daily and the 4 hour charts offers several opportunities in a week. Of course, it is not profitable, long term, to depend on this strategy, this is a means of seeing what may be happening to individual instruments.
Below is a chart of EURUSD daily showing several crosses, some of them lead to nice profits while others are in a choppy market or a consolidation period and may prove to be poor entries. A person will need to determine entry criteria in all cases. (The last bar on this chart illustrates the need for a stop loss and trailing stop. The sudden reversal can wipe out any gains and lead to losses)
There are numerous indicators that will help a person determine validity of an entry. On the chart I have shown the Ichimoku Cloud and CCI, those may or may not be of value to an individual. I would think that a trailing stop is a necessity on every entry as reversals can come quickly.
I am providing a scan on a regular basis to the readers in order to point out any significant 5 – 10 crossovers on the daily and 4 hour charts. The lower time frames would be unsuitable for this type of scan as the choppy periods and consolidation periods occur far too frequently.
Takeaways re 5 – 20 crossover trading strategy
- Easy to keep track of many instruments
- Simple to understand
- Requires confirmations for market entries
- Unreliable for faster time frames.
- Definitely requires a stop loss and trailing stop
- Can point out the beginning of long and profitable trends
Here is a video discussing moving average crossover trading strategy.