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Home Analysis Strategies

Price Crossover – Trading Strategies

Learn how to use the Moving Average for your trading strategies

Traders Cult by Traders Cult
February 5, 2022
in Analysis, Strategies
Reading Time:3 mins read
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Learn how to use the price crossover strategy
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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.

Requirements

What you need to apply this Price Crossover is:

  • Candlestick Chart
  • WMA Indicator
  • A Demo account

Additional Indicators

  • ADX
  • 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.

Daily crossover of WMAThe 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. 

wma crossover daily short

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. 

WMA Crossover on hourly timeframe

 

Recommendations

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.

SL and TP using ADX and other indicatorsIt 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.

Traders Cult

Traders Cult

Traderscult.com is a community of independent traders, working on Forex and other financial instruments since 2015 with the Educational Trades brand. Our purpose is to support traders experience through educational materials, videos, courses, reviews and more.

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© 2021 Traders Cult - General Risk Warning: The financial products offered by the companies presented here carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose. All materials included in this site are NOT AN INVESTMENT ADVICE. Please be advised that certain products and/or multiplier levels may not be available for traders from EEA countries due to legal restrictions. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage

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