Strategy with MA 200
  1. The moving average we will use here is the 200 simple moving average (SMA).
  2. Depending on the trading style, you can choose the appropriate time frame. If you trade long-term, you should focus on the D1 frame upwards. If you trade in medium-term or intraday trading, you can focus on H4 or H1. If you are a scalper then choose a lower timeframe.
  3. The currency pair that performed well with the 6-month tested SMA 200 on its signal from the 200 is quite accurate including:
  • EURJPY = 95%
  • EURUSD = 93%
  • EURCHF = 90%
  • GBPUSD = 85%
  • GBPCHF = 80%
  • GBPJPY = 80%
A number of signals: changes according to the time frame, for example, the H1 frame has 3-5 chances a day, while the M15 has 10-15 opportunities a day. And note that the SMA acts as a support resistance, so when we buy and sell, we should understand this role of moving averages.

Trading signals

We have 2 types:
  • Sign of a bounce-back: It means that the price will be pushed back when approaching the 200 SMA. However, whether to buy or sell depends on the direction of the pair.
  • Breakout Signal: It means the price approaches and breaks down of the 200 SMA. And we trade after the price breaks.
Trading example

For bounce back signal

Entry and exit points on the H1 frame: Enter an order when the price touches the 200 SMA. And a new entry point is entered when the price continues to approach the MA line again. However, the maximum number of entries is 3 and the stop loss is separate for each order.

The stop loss is about 50 pips from the entry point or on any candlestick that closes above the moving average (for the downtrend) or below the moving average (for an uptrend).

Take profit in the range of 100 pips up to 500 pips. And you can move the stop loss in accordance with the trend.

M5's entry and exit points: similar to H1, only the stop loss will be at 30 pips and take profit with a target of 30 pips to 100 pips and can move the stop loss in direction.

For breakout signal

Entry and exit points on H1 and M5: Enter an order when the price returns to the retest after breaking the moving average. Stop loss and take profit like I had if above the reverse bounce.

Frame H1:

Frame M5:

This is the simple yet most effective way to use the MA 200, and also gives you many profitable strategies.