Trade using Price Crossover
Price Crossover strategy is especially suitable for experienced traders, but with a little patience and study on your demo account you can apply it even if you are a beginner.
What you need to apply this Price Crossover is:
- Bollinger Bands
Price Crossover Settings
Overlay on your charts with daily timeframe the Moving Average Weighted (WMA), set to 12 periods to detect a potential initial trend or change in trend.
The image above shows a bullish situation. When the price crosses above the Moving Average there is a valid bullish signal, thus you might open a Long position.
The image above shows a bearish trend. When the price crosses below the Moving Average there is a valid bearish signal, thus you might open a Short position.
For longer time frames such as the daily or weekly it is advisable to enter as soon as the price crosses the moving average. For shorter timeframes such as hourly, it is advisable to wait for the candle to close by making the full crossing. See the example below.
It is also good to find a clean crossing of the price with the moving average. Often the price touches the moving average and then rebounds. Be careful!
Even if it is not a fixed rule, it is good to invest following the trend.
Fix Take Profit and Stop Loss levels assisted by daily Pivot Point Indicator, ADX set with the “ADX Smoothing” at 6 periods and the “DI Length” set to 12 periods, plus the Bollinger Bands set to 24 periods and Standard deviation to 2.
It is advisable to use this method only if you are an experienced trader; for long term investments you may also adopt one Moving Average with daily time frame set on 200 periods, to study the overall price Trend.
For all traders it is also advisable to test this strategy on your Demo Account before invest your real money.