This indicator draws a horizontal line on the price chart at the point where two pre-defined SMA (Simple Moving Average) lines intersect. It is most useful for identifying crossed SMA lines on the 1-hour chart and then trading on smaller chart intervals.
For optimal performance, it is recommended to customize the values of the SMA lines individually for each currency pair, as these values can vary from one pair to another. To do this, switch to the 1-hour chart and adjust the SMA parameters until you visually observe that these settings would yield favorable results based on historical data. Certainly, you can also adjust the length of the lines accordingly when you switch from the 1-hour chart to smaller timeframes.
Please note that this indicator allows traders to visually identify potential trend changes and crossovers between short-term and long-term moving averages, aiding in decision-making for trading strategies.
HA! I haven't seen this strategy since my days using Lua and fxcodebase ten years ago. So simple but so powerful. Love when price retraces back to a ma crossover. Or better yet, when price is present when the crossover occurs is a very strong signal. I found 50/200 a very good combo, so many traders look at that, so good liquidity when that occurs. Thanks for sharing!
Rami_LB
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@cooney_s, Hey, thanks for your message and confirmation. I published this indicator exactly three days ago and I'm wondering why so few traders have tried it so far. My assumption is that not many people truly understand how to use this indicator. It's indeed a very powerful tool. I've conducted backtests for the last two months on two different currency pairs using the default values, and here are the results:
1st currency pair: 8 successful trades, 4 losses. Risk-reward ratio (RRR) minus losses resulted in a 21x factor in profit.
2nd currency pair: 8 successful trades, 8 losses. RRR minus losses resulted in a 24x factor in profit.
I'm considering adding a detailed strategy description here in the near future so that traders can better understand how to utilize this indicator for maximum success.
cooney_s
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@Rami_LB, Nice results. My experience was to cut out any draw down by not opening trades when the cross occurs, but putting my focus on the level of the cross. That is where the entries lay. Knowing price action reversal patterns when these crosses occur also is a great way to read the play.
Rami_LB
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@cooney_s, Exactly as you describe, that's how the strategy works for me too. When a crossover occurs on the 1-hour chart and it forms a support line there, I first check the 2-minute chart to see if the price is above the crossover or if the trend is heading in that direction. Only then do I consider that price as a legitimate support line. I wait for the price to move back towards the support line and look for a bullish confirmation at that level. I then set a Take Profit order at the last high and a Stop Loss order below the last low, but not exceeding 4 pips.
For the resistance line, I follow the same process, but in reverse