GBPUSD MA Strategy

[benrodwell]

Hi Guys - hello and a big thank you for all the advice I have been reading over the last few weeks - kept wanting to post only to find answers to all my questions already here!

I have previously mostly traded stocks EOD, on basic support, resistance, and trends using pairs of mas as the only indicators.

I got interested in FX and have observed GBPUSD for a while on short time scales - in particular 5mins. I can't help but notice that there are frequently several times a day when the price goes through both a 20 and 40ma and when it does so it usually is good for 15 pips sometimes a lot more, with quite a tight stop loss.
I have been trying to find an indicator that might help to eliminate the odd time when the ma is only just penetrated prior to a bounce back.
Is this a strategy anyone has used, and if so any suggestions as to how to fine tune it a bit ?
I haven't tried it live again recently but did work with limited success in Jan feb this year, and looking at the recent charts might work again ?
Any help appreciated.
Ben

 

[rawrschach]

So you're saying that you've notice that when price cross the MA it moves 15 or so pips, except for when it doesn't, and you want an indicator that will point this out to you...

or am I missing something...

 

[theroguetrader]

Hi mate,


hope you dont mind me posting ,hope your tradings going well n stuff..!! Just a few things if its ok maybe pointin out -

1) Try not to use MAs for signals on short time frames - just trade off the " price action " and the short term trend.

2) MAs are " lagging indicators " - which basically means, by the time a signal is generated, the trend will have already changed direction. A 5min price is just that - " a 5 min price "... If cable tomorrow opens lower than todays close, and the markets short,
just trade it downwards and go with the momentum - forget the MAs...Just use your levels -

3) DONT buy re-tracements.. !! (its just human Psychology again - people feel " safer " buying something that previously sold at a " higher " price) - !! GET OUT OF THE HABIT.. !! - (its purely mental - you can overcome it with practice) .. !! - Its " Psychologically seductive " - but doing what feels " comfy " - is invariably the " WORST " thing you can do sometimes.. !! - especially in trading...!!
(in market terms - it means youll probably miss the move completely or be FORCED to buy at a HIGHER price - THINK about what your doing.. !!

4) If your trading a break-out (see example) - (which can make GIGANTIC profits in a VERY short space of time), dont forget, its "Crowd Behaviour "moving the market, and enabling YOU to profit from it..!!
- (remember the run on NR..?? one Daily Mail reader after another turned up, hr after hr - day after day -(all caused by a positive feedback loop, which set off a " chain reaction " - culminating in the run on the bank..!!
Its ALL about market psychology and human behaviour.

5) Trying to make too much money TOO QUICKLY usually results in disaster - the " secret " to making money in the markets is " compounding " - (like the grain of rice principle) - and with varying lot sizes and leverage- whatever you want to generate - you can - it just takes time - (and thats where your DISCIPLINE comes in)...!!


When we work, we trade " TIME" - for MONEY (in the form of wages/salaries) - In the markets,instead of us " working for money " - we make money " WORK FOR US " - by using " leverage "....!! (but its a double - edged sword,so youve ALWAYS got to treat it with care)...!!

a 1 lot x 20 ticks = 200.00 (4k per month)
a 50 lot x 10 ticks = 5000.00(100k per month)

Its all about practice and confidence... !! - The mysterious " edge " thats always talked about, isnt a mystery, everyone has it ..What gives you the " EDGE " - is " YOUR" ability to trade with total discipline, using YOUR logic and follow " YOUR " rules - 100% EXACTLY..!!


Hope its all goin well n stuff..!!

Hi Guys - hello and a big thank you for all the advice I have been reading over the last few weeks - kept wanting to post only to find answers to all my questions already here!

I have previously mostly traded stocks EOD, on basic support, resistance, and trends using pairs of mas as the only indicators.

I got interested in FX and have observed GBPUSD for a while on short time scales - in particular 5mins. I can't help but notice that there are frequently several times a day when the price goes through both a 20 and 40ma and when it does so it usually is good for 15 pips sometimes a lot more, with quite a tight stop loss.
I have been trying to find an indicator that might help to eliminate the odd time when the ma is only just penetrated prior to a bounce back.
Is this a strategy anyone has used, and if so any suggestions as to how to fine tune it a bit ?
I haven't tried it live again recently but did work with limited success in Jan feb this year, and looking at the recent charts might work again ?
Any help appreciated.
Ben

 

[benrodwell]

Hi Choc13
My point was that I am looking at both mas not just one. If the price is below both 20 and 40ma then goes through the 20 it usually bounces off the 40. On those occasions when it also goes through the 40 it usually goes through by 15 pips minimum.
I will persevere....
Ben

 

[rathcoole_exile]

Hi Choc13
My point was that I am looking at both mas not just one. If the price is below both 20 and 40ma then goes through the 20 it usually bounces off the 40. On those occasions when it also goes through the 40 it usually goes through by 15 pips minimum.
I will persevere....
Ben

am i missing something ? why any need for the 20 sma in this case, why not just trade straight breakouts of the 40sma ?

 

[benrodwell]

Hi Thanks for the reply
I havent explained myself properly - or maybe I am doing what you say?
In addition to effectively trading a 40ma breakout, when prices fall back through the 40ma they usually bounce off the 20ma - but on a lot of occasions that they penetrate the 20ma they continue to fall quite a bit, and vice versa
This gives a bit of no-man's land between the 20 and 40ma and enables a trade in either direction regardless of larger trends, and suits choppy conditions.
Maybe this is what swing traders do ? I don't know, I'm new to this and never really asked what other people do before.
Ben

 

[alan5616]

Hi Thanks for the reply
I havent explained myself properly - or maybe I am doing what you say?
In addition to effectively trading a 40ma breakout, when prices fall back through the 40ma they usually bounce off the 20ma - but on a lot of occasions that they penetrate the 20ma they continue to fall quite a bit, and vice versa
This gives a bit of no-man's land between the 20 and 40ma and enables a trade in either direction regardless of larger trends, and suits choppy conditions.
Maybe this is what swing traders do ? I don't know, I'm new to this and never really asked what other people do before.
Ben

You really don't need to use MAs to identify price action. By their very nature, they are drawn from prices that occurred prior to where the market is trading right now. In other words they are lagging indicators and, therefore, reactive.

If you rely on MAs, you will miss some very good moves. By the time the MAs have caught up, perhaps 10 bars later, the real price momentum is well under way. On some markets, this could be 50-100 pts., even on a 5 min tf.

Imho, price action is everything. All the technical indicators are just clutter that, if relied upon for decision making, will prevent you from entering profitable trades.

 

[shadowninja]

Post now void since spammer/scammer has had their post removed.

 

[rathcoole_exile]

oops, looks like another applicant for vendor status ?