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Old 11-04-2009, 19:29
SquareRoot SquareRoot is offline
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Quote:
Originally Posted by Raskolnikov View Post
Does anyone use the crossover of these two indicators to signal trades?

If you draw them on your charts you'll notice on just about every pair or indice that a 50SMA crossing below the 200SMA indicates a very strong bearish downtrend and vice versa. The 200SMA appears to be a good place for a stop loss and trailing a stop somewhere above the 50SMA should give decent results. Anyone see any problems in an approach like this?

Take a look at the USD/JPY for example. A bearish crossover occured on the 22nd of October last year. Catching it would have netted several hundred pips in the short run (500 at least). Using the SMA as a stop loss you would have been kept in the trade until early January in profit.

Now we can see a bullish crossover is about to occur on the same pair. Worth taking a long position?
On which time frame are you looking?
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