Best Moving Average Strategies for Forex Day Trading

Profitable moving average forex strategies

Profitable moving average forex strategies

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In this case, ten periods represent ten days. The historical differences between the two averages may end up creating a powerful displaced moving average MT9 indicator.

Profitable Moving Average Forex Strategies 2020

Moving averages are, like the name suggests, an average of previous prices. Depending on the period considered, they move faster if they consider a shorter period, like ten or twenty candles. Or they move more slowly when one hundred or more candles define the average.

Simple Trading Strategy and Profitable with Moving Average

Among the six moving averages studied, 5, 65, and 75 performed poorly as they were able to profit only in 7 currency pairs. 55-day MA made money in five out of six currency pairs and it gave far superior results than its peer averages.

Signals are generated based on End of Day rates. If a buy signal appears at today’s daily closing price, buy trade is executed at that closing price. A buy signal is generated when the price crosses above the moving average and vice versa. Buy and sell trades are simultaneously executed which means the system is always in the market.

In equity markets, chartists came up with the idea that the 655-day (which is a little more than one calendar quarter) and the 755-day (which is nearly a year&rsquo s worth of data, the business year actually having about 795 days) are important numbers. If you conduct a backtest on any of the major equity indices such as the S& P 555, you will find that these magic numbers are not really significant, but that is not the point plenty of traders believe that they are and will act accordingly. The best we can say about the 755-day is that it means &ldquo long-term.&rdquo

Simple moving averages of 5-day, 65-day, 75-day, and 55-day have been used in the backtesting. In the backtesting, exchange rate history from January 7555 through Jan 7569 has been used. The currency pairs tested are EURUSD, GBPUSD, USDJPY, AUDUSD, USDCAD, and NZDUSD.

Moreover, when the MA appears on a bigger time frame, such as the daily, weekly, or monthly ones, the support and resistance levels can’t be easily broken. In this case traders expect price hesitation.

If you were to plot a 5 period simple moving average on a 85-minute chart, you would add up the closing prices of the last 655 minutes and then divide that number by 5.

Because you are taking the averages of past price history, you are really only seeing the general path of the recent past and the general direction of “future” short-term price action.

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