7 Best Trading Strategies Developed From Moving Averages.

  1. Double Moving Average Strategy.

The strategy is based on applying two moving averages on your chart. You apply a short and long period moving averages (example – 9 and 21) on the chart.

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Afterward, observe points where the short moving average crosses over the long moving average. 

If there is any, trade in the direction of the crossover.

A buy set up presents when the short moving average crosses over the long moving average from below upwards.

A sell set up, on the flip side, gives trading opportunities when the short moving average crosses over the long moving average from above downwards.

  1. Triple Moving Average Strategy.

As in the name, this strategy is based on three moving averages.

You apply a short, medium, and long moving averages (9, 21, and 55) on the chart.

Just like the double moving average, this strategy is also very simple to use.

You observe the points where the short, medium, and the long moving averages crossover in order.

If you spot any entry point meeting these criteria, trade in the direction of the crossover.

A buy set up is simple.

The short moving average first crosses over the medium from below upwards, then the two, in that order, cross over the long moving average from below upwards.

Conversely, here is a sell setup.

The short moving average first crosses over the medium from above downwards, then the two, in that order, cross over the long moving average from above downwards.

  1. Directional Bias Strategy.

Did you know that you can establish a directional bias using moving averages?

To do so, you only need one moving average, say MA 50.

How to use the moving average to establish a directional bias.

First, apply it to your chart.

You can then observe how the price behaves with respect to the moving average.

When the price crosses the moving average from the lower to the upper side, you note that the price tends to remain on the upper side of the moving average.

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On the flip side, when the price crosses over when the price crosses to the lower side, it tends to remain there.

You can then trade up when the price crosses to the upper side of the moving average and down when the price crosses to the lower side.

  1. Blade Runner Strategy.

The strategy is pegged on the 20 period EMA.

The moving average acts as a moving support or resistance. That way, when the price hits the moving average, you expect it to bounce back.

So how do you trade this strategy? Apply the 20-period Exponential Moving Average on your price chart.

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Afterward, observe how the price behaves in relation to this moving average.

When the price crosses from below to above the moving average, an upward bias is identified.

To confirm the bias, the price must first fall to the moving average and fail to break it downwards. Instead, bouncing off the moving average upwards confirming you can enter an up trade.

On the contrary, price crossing from above to below the moving average hints to a downward bias.

Confirmation is made when the price rises to the moving average and fails to break it upward. Bouncing back downwards is a green light to sell.

Also, Read – 29 Technical Analysis Tools to Use to Make Money in Olymp Trade.

  1. With-the-trend Trading.

Moving averages are trend indicators.

They are therefore indicators of where the trend is headed and can be used to trade with the trend.

So how do moving averages show the trend direction?

Where they point and their orientation at a given time is where they hint the trend to be going.

It is so simple to trade the trend using moving averages.

Just observe where the moving averages point and how the price behaves with respect to the moving average that you apply.

You can apply one or several moving averages.

Buy set-ups present when the moving averages point upwards and the price is above the moving averages.

Sell set-ups, on the other hand, are hinted by the moving averages pointing downwards and the price remains below the moving averages.

  1. Against-the-trend Trading.

Did you know that you can actually trade against the trend?

Well then, if not, you are just about to.

A perfect circumstance to trade against the trend is after a trading gap has occurred.

You must have known already that trading gaps can be filled before the prevailing trend resumes.

And here is the deal.

There needs to be a dominant trend first, then a gap occurs in the direction of the trend.

Observe the moving average until it slows. When the moving average slows, it means that it is time to fill the gap.

Filling the gap will mean trading against the direction the gap occurred, which is the direction of the primary trend. 

  1. Price-MA Cross.

With this strategy, you apply any moving average that suits your needs. It doesn’t matter that you go for EMA, WMA, or SMA. Just choose one.

Afterward, change your chart type to candlesticks. The moving average will most times cut some candlesticks randomly.

When the moving average cuts a bearish candlestick, the trend is downwards and so you trade down.

On the contrary, when the moving average cuts a bullish candlestick, the trend is in most cases upwards and so you trade up.


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

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