This is a very simple Scalping trading strategy based on the crossover of 2 moving averages to enter orders. In particular, it does not need to do much analysis. Just install 2 common technical indicators and follow the rules of placing Forex orders to make profits for your account.
Now let’s learn its trading rules.
- Time frame: M5 or M15 frame
- Currency pairs: EUR/USD, GBP/USD, and USD/JPY
- Trading session: European or American session
- Technical indicators: Smoothed MA 5 (SMA) and Weighted MA 144 (WMA).
Trading ideas of the Crossover strategy
First, let’s talk a little bit about the currency pairs traded in this Crossover strategy. Because the currency pairs we choose to trade have low spreads, we only trade during the European and American sessions with high volume so that we can reach the 50 pip profit target more easily.
The trading idea of this strategy is extremely simple. The crossover of moving averages is seen as trend transitions. We can take advantage of the fact that the market will move in the trend after this crossover to make a profit. This level of profit is not much but it is consistent with the crossover characteristics of the 2 moving averages.
The SMA5 is the fast-moving average and the WMA144 is the slow-moving average. We use the crossover of these 2 moving averages to find trading opportunities.
Trading rules of the Crossover strategy
For buy setup
Let’s look at the chart and rules for bullish orders below.
The signal to enter bullish orders is very simple. We will enter an order as soon as the SMA 5 (the blue line) crosses above the WMA 144 (the orange line). This is a signal that the market is moving from a downtrend to an uptrend.
The stop loss is placed 25 pips below the entry point. And set take profit 50 pips from the entry point.
For sell setup
The bearish order is similar to the bullish one. We will enter a bullish order as soon as the SMA 5 crosses below the WMA 144 because this crossover signal shows that the market is reversing from bullish to bearish.
Place stop loss 15 pips above entry and take profit 20 pips from entry.
It can be seen that the trading principle of this strategy is very simple. We take advantage of the time when the market changes direction to make a profit. Although this profit is not high, it is very feasible and stable.
In addition, you can move your stop loss to breakeven as soon as there is a profit of 10-20 pips.
This Crossover strategy is not about catching big waves or big pips. It only targets 50 pips and stops loss at 25 pips, with a small R.R ratio but it meets the requirements of a good strategy with a reasonable profitability.
In general, if you trade this strategy, you need to follow the trading rules and determine the correct entry and exit points to get consistent trading results. Good luck.
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