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    Method 1 - Triple Moving Average Trading Strategy

    Uploaded by

    Vibhats Vibhor
    A triple moving average trading strategy uses three moving averages - a long term, medium term, and short term moving average - to determine trends and generate buy/sell signals. Trends are identified by whether the long term moving average is above or below the medium term moving average. Signals occur when the short term moving average crosses above or below the medium term moving average, indicating it is time to buy on dips in an uptrend or sell rallies in a downtrend. While simple, flexibility is required as signals don't always occur as defined and trades may need to be entered before official crossovers. This strategy works due to its use of momentum - when the short term moving average crosses the long term, it signals a change

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    Method 1 - Triple Moving Average Trading Strategy

    Uploaded by

    Vibhats Vibhor
    522 views8 pages
    A triple moving average trading strategy uses three moving averages - a long term, medium term, and short term moving average - to determine trends and generate buy/sell signals. Trends are identified by whether the long term moving average is above or below the medium term moving average. Signals occur when the short term moving average crosses above or below the medium term moving average, indicating it is time to buy on dips in an uptrend or sell rallies in a downtrend. While simple, flexibility is required as signals don't always occur as defined and trades may need to be entered before official crossovers. This strategy works due to its use of momentum - when the short term moving average crosses the long term, it signals a change

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    Method 1 _ Triple Moving Average Trading Strategy

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    Method 1 _ Triple Moving Average Trading Strategy

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    A triple moving average trading strategy uses three moving averages - a long term, medium term, and short term moving average - to determine trends and generate buy/sell signals. Trends are identified by whether the long term moving average is above or below the medium term moving average. Signals occur when the short term moving average crosses above or below the medium term moving average, indicating it is time to buy on dips in an uptrend or sell rallies in a downtrend. While simple, flexibility is required as signals don't always occur as defined and trades may need to be entered before official crossovers. This strategy works due to its use of momentum - when the short term moving average crosses the long term, it signals a change

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    522 views8 pages

    Method 1 - Triple Moving Average Trading Strategy

    Uploaded by

    Vibhats Vibhor
    A triple moving average trading strategy uses three moving averages - a long term, medium term, and short term moving average - to determine trends and generate buy/sell signals. Trends are identified by whether the long term moving average is above or below the medium term moving average. Signals occur when the short term moving average crosses above or below the medium term moving average, indicating it is time to buy on dips in an uptrend or sell rallies in a downtrend. While simple, flexibility is required as signals don't always occur as defined and trades may need to be entered before official crossovers. This strategy works due to its use of momentum - when the short term moving average crosses the long term, it signals a change

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    The document discusses using a triple moving average strategy to identify trends and time entries and exits in trending markets. It provides examples of how longer, medium, and shorter term moving averages can be combined to generate trading signals.

    Longer term moving averages like the 200 period EMA can be used to determine the overall direction of the trend. When the price is above the 200 EMA, it indicates an uptrend, and below indicates a downtrend.

    Once the trend is identified, shorter term moving averages like the 12 and 26 period EMAs can help time entries by looking for crossovers where the shorter term EMA crosses above the longer term EMA, indicating a resumption of the trend.

    Method 1 Triple moving average trading

    strategy

    A triple moving average trading strategy is well known and fairly common. It is a simple trend
    following strategy that is determined based on the moving averages that are being used. A triple
    moving average trading method involves using a very long term MA, a medium term MA and a
    short term MA. The moving averages can be exponential or simple, depending on a traders
    preferences. As for values, the general combinations are 200, 100, 50 or 100, 50, 20 or 10
    depending on the timeframe.

    Of course, there is no specific rule on the values (periods) of the moving average, and it is up to
    the trader to decide what values to use.

    Understanding the triple moving average system


    A triple moving average trading system is based off buying the dips in an uptrend or selling the
    rallies in a downtrend. Trends are determined as follows:
    Long term MA is above medium term MA = Uptrend
    Therefore, buy the dips or retracements when the short term MA signals a bullish
    crossover.
    Long term MA is below medium term MA = Downtrend
    Therefore, sell the rallies or retracements when the short term MA signals a bearish
    crossover.

    The above rules are very simple to understand and as for the stop loss and take profit levels, it is
    up to the trader to decide how they want to place their levels. It could be a trailing stop or a fixed
    RR set up.

    There are many articles and tutorials (and even EAs) that cover this rather simple approach to
    trading. But here are some unique ways you can pick up on potential buy and sell signals. For the
    remainder of this article, we will use 100, 50 and 10 EMAs.

    Triple EMA: The 10 100 Crossover


    Long or short signals are generated when 10 and 100 EMAs interact. However, this is not a
    signal to immediately enter the trade. A perfect 10/100 crossover buy signal occurs when all
    three EMAs are previously bearish (or bullish in case of a sell). Then, the 10 EMA makes a
    bullish crossover on the 100 EMA (but the 50 EMA is still below 100).

    Look to the chart below which illustrates a false sell signal and a perfect buy signal.

    10/100 Crossover:
    Difference between correct and false signals

    Now that you have identified a perfect (buy) signal, the next step is to plot the highs and lows of
    the candle which triggered the 10/100 crossover. Then, wait for the 50/100 (bullish) crossover
    and wait for price to breakout or close above the range high that you have selected.

    Go for a 1:1, 1:2 and 1:3 RR set ups and move your stop losses accordingly.
    Triple EMA Buy signal

    There is a bit of flexibility that you can allow for yourself. The next example shows a sell signal
    where we go short before the 50/100 crossover. The reasoning behind this sell set up is due to the
    nature of the slope of the 50 and 100 EMA. If you had to wait for the 50/100 crossover you
    would have missed an entry (although there would have been other ways to trade).

    Triple EMA Sell signal

    In the above example, we go short on the breakout from the candles range low. At the time of
    entry there was to 50/100 crossover, but the slope of the EMAs suggested that there would be
    bearish crossover. In this example however, the trade would have reached T1, T2 but T3 would
    have been stopped out near T1. Still, the set up offered a very good RR.

    Not all set ups are created equally


    The trick in trading this method is to allow yourself enough chart time to be familiar for this
    pattern to play out. Not all set ups work out exactly the way as defined. The first chart below
    shows an example. Here after we set the range on the 10/100 crossover EMA, price takes a while
    before triggering a signal. Of course you could have entered long on the breakout from the first
    level, or you could have waited for the second retracement. Regardless of the trade entry, notice
    both the trades moved in your favor.

    Flexibility in trading this


    method

    And in some instances, the trade is not triggered at all. The next chart below shows a short signal
    that quickly reached up to T3 while the long signal did not trigger the set up.

    Triple EMA: Long trade


    failed to trigger

    As outlined in the above examples, this unique way to trade the triple EMA offers an objective
    way to trade with a controlled risk/reward set up.

    Why does this set up work?


    If you have asked yourself this question, chances are that you are thinking on the right track.
    This trade set up work because of momentum. When 10EMA cuts across (50 EMA first and) 100
    EMA, it signals strong momentum in price. Thus, based on the dips or rallies that occur later, the
    trade can be entered safely in the direction of the momentum.
    The 3 Step EMA Strategy for Forex Trends
    by Walker England

    Talking Points:

    EMAs are weighted averages used in trending markets.


    Find the trend with a 200 period EMA.
    Time entries using a series of EMAs utilizing smaller periods.

    When it comes to trending markets, traders have many options in regards to strategy. Today we
    will review EMAs and how they can be used to create a complete strategy for Forex trends.

    Lets get started!

    The EMA

    Todays strategy will revolve around the use of a series of EMAs (Exponential Moving
    Average). These averages work the same as a traditional SMA (Simple Moving Average) by
    directly displaying an average of price for a selected period on the graph. However, the EMAs
    calculation incorporates a weight to put a greater emphasis on most recent price. This weight is
    placed to remove some of the lag found with a traditional SMA. This makes the EMA a perfect
    candidate for trend trading.

    Now that you are familiarized with EMAs lets look at their uses in a trend trading plan.

    Find the Trend

    Before we enter into a trend based position, we need to know exactly which way that trend is
    heading. Below we have the GBPCAD on a 4Hour Chart. We can see the pair is making new
    highs while establishing higher lows, which makes the GBPCAD a strong candidate for an
    uptrend. This analysis can be confirmed by the use of a 200 EMA. Traditionally traders are
    bullish when price is above the 200 EMA and bearish if price resides under the average.

    Given the information above, traders should look to buy the GBPCAD.

    Learn Forex GBPCAD 4Hour Trend & 200EMA

    (Chart created by Walker England)

    Timing Market Entries

    Once market direction is identified, we can then use a series of EMAs to enter the market.
    Below we can see that a 12 and 26 period EMA have been added to the graph. Since we are only
    looking to buy in an uptrend, it is important to identify areas where momentum is turning back in
    the direction of the trend. EMAs can help us decipher this by identifying an area where our
    shorter period moving average crosses above the longer period EMA. At this point traders can
    look to buy the market.
    Below you will find several sample buy entries using EMAs on the GBPCAD. Remember, this
    process can be replicated for a downtrend by selling in the event that the 12 period EMA crosses
    below the 26.

    Learn Forex GBPCAD 4Hour Entries

    (Chart created by Walker England)

    Exiting Positions

    Now that a trade has been opened, traders need to identify when it is time to exit the market. This
    is the third and final step in developing a successful strategy! Traders may choose a variety of
    stop/limit and risk reward combinations here to suit their trading needs. However, if you are
    already using a series of EMAs they can be incorporated into your market exit. If we are buying
    on a return to bullish momentum, traders should close positions when momentum subsides. This
    can be found in an uptrend when price moves back and touches the 12 period EMA.

    Stops should also be placed when trading with the trend. One simple methodology is to place
    stops under a swing high or low on the graph. This way in the event that the trend turns, any
    positions can be exited for a loss as quickly as possible. The graphic below will show an example
    of both scenarios.

    Learn Forex GBPCAD EMA Exits

    ---Written by Walker England, Trading Instructor

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