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2021 4 SMA Trading Strategy
2021 4 SMA Trading Strategy
Your chart should now look like this (if it doesn’t then go
through the above steps again! )
The first thing to note is that we trade with the current trend.
We use the MAs (moving averages) to help us with that.
If the red MAs (60) are above the blue MAs (240) – then we
only look to take long positions.
If the red MAs are below the blue MAs – then we only look to
take short positions.
In other words, if the red MAs are above the blue MAs, the
angles of all the MAs should be upwards – like this:
The above rule is the same for short trades – when the red
MAs are below the blue MAs, we also was them all to be
angled downwards too!
So you can see in the above chart that in the inner-box the
pair of red MAs are below the pair of blue MAs (well, they
are overlapping a little, but you can see what I mean,
right?).
We take long entries when the red MA pairs are above the
blue MA pairs (and vice-versa for short entries).
Here’s an example:
You can also see in the above chart where we place our
stoploss – it’s always below the low of the pullback for a long
(or above the high of the pullback for a short).
Why?
Curious?