This is a trading strategy that can provide gains of between 20-30 pips per trade so it can be quite profitable. This trading system is very simple to use and its signals are easy to follow. The main features of this strategy are the following:
This is a trading system that combine the use of two well known technical indicators: moving averages and MACD. Also, the trader can use the Momentum indicator to confirm the trend direction. Basically, this system attempts to profit from changes in the market trend. The MACD and the Momentum are necessary because the moving averages crosses are not too reliable signals.
Trading Instruments
As it is a trading strategy based on technical indicators, it can be used to trade with any instruments making the appropriate changes for each market. However, initially it was developed to trade in the Forex market.
If the EMA 13 crosses the EMA 89 upward and the MACD/Momentum confirm the market direction, we can open a long position.
-Sell Signal
If the EMA 13 crosses the EMA 89 downward and the MACD/Momentum confirm the market direction, we can open a short position.
*If there is a moving average cross in any direction but this signal is not followed by the confirmation of the MACD/Momentum, the trader should stay out the market.
Additional Notes
As we mentioned previously, this trading systema may require the use technical indicators like the MACD and the Momentum to ensure the reliability of the signals.
Normally, the trading signals generated by moving averages crosses are not too reliable. In fact, in many cases these crosses produce many false signals. For this reason, is necessary some kind of filter.
In this case, the MACD and/or the Momentum provide this filter.
Thanks to this filter, This trading system produces few signs, but these are much more reliable.
Example of trading signal generated by this trading system
