Posted by: Babu Suresh | October 21, 2010

MA (Moving Average) Crossing

“No Trading Strategy can perform on its own and produce 100% results, it is entirely based on the user. The strategy is like a Light House, giving us direction and guidance to the destination”.

“A trader who works 70% on his self and 30% on his strategy, closes the day with positive results than the trader works the other way round”

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Trading with Moving Average Crossing has perhaps been one of the most popular methods used by traders, especially Simple and Exponential Average Moving Averages Crossing.

I wish to share with you why I use MA crossings and how I use them in my trading strategy.

A normal approach to MA crossing always leads to substantial failures, while if you take time to study the beauty of this system, you will find why it is such a wonderful system if properly used. Needless to say, it is always recommended to use RSI & MACD before deciding to go for a trade on MA Crossings as they nicely complement with each other.

Understanding the distance between MAs, be it SMAs or EMAs, is very much important before entering a trade. There are instances when all the MAs can be found way apart from each other, this is the stage to avoid any trades; while there are times when they are respectably closer to each other. The best time to go for a trade is when all the MAs converge at one point. Since SMA is  lagging in nature, the entry signal may be delayed.

I am a Day Trader.

My trading strategy is based on MAs crossings. I use 3 charts and I use 4 different MAs in each of these charts.

Also, I use RSI & MACD to measure the strengths and weaknesses of the price movement.

I trade the following Futures Instrument:

1. TF (Mini-Russell 2000 Index) (PitBull-1)

2. CL (Crude Oil) (PitBull-2)

My entry strategies:

I follow 2 Trend following strategies:

1. Long Bull Strategy

2. Short Bull Strategy

1. My trading entries are based on 15 Sec. chart while I use 6 Range and 2 Min. to know the direction of the Price.

2. I enter a trade only when all 4 MAs in 15 Sec. chart converge at one point.

3. There are times when MAs in both 6 Range and 15 Sec. charts converge at one point, this is perhaps the best time to aim for larger ticks.

4. If for any reasons I miss a trade, I keep quiet and watch until I get another chance, never chase the price.

5. I also use Pivot and Weekly Fib. levels for supports and resistances.

6. I avoid sideways market, avoid News time trading.

My Exit Strategy:

I look for 6 to 10 ticks per trade.

My Daily Target:

30 to 40 Ticks

In my next articles, I will further elaborate how I use MA crossings with illustrations.

Healthy And Wealthy Trading

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