Confirmed Crossover Forex Trading Strategy is a very basic and popularly used trading strategy. It is a pretty fast crossover strategy that excels in catching a trend pretty early. As you could notice, the 5-10 SMA strategy is able to capture big trends from start to finish. Because the moving averages used hug closely to price, the crossovers could respond quickly to whatever price does and therefore allows us to catch a trend right from the start.
Knowing that confluences stack the odds on our favor when looking for confluences, this strategy will be based on the 5-10 SMA Crossover Strategy, but with some additional confluences. What we will be looking for is a crossover that agrees with the long-term trend and a fresh thrust.
To filter signals that do not agree with the long-term trend, we will be using the 200 Exponential Moving Average (EMA). This is a commonly used moving average filter that many traders use to determine the long-term trend.
Indicator:
- 5-period SMA (Gold)
- 10-period SMA (Green)
- 200-period EMA (Brown)
- Stochastic Oscillator
Currency Pair: any
Timeframe: 4-hour and daily charts
Trading Session: any
How to trade with Confirmed Crossover Forex Trading Strategy?
Entry
- Price and the 5 & 10 SMAs should be above the 200 SMA
- Fast Stochastic should be above the Slow Stochastic line
- 5 SMA should cross above the 10 SMA
- Fast Stochastic should be crossing above 50
- Enter at the close of the candle corresponding the confluence of the above rules
Stop Loss
- Set the stop loss below the 10 SMA
Exit/Take Profit
- Option 1: Set the take profit at 2x the risk on the stop loss
- Option 2: Close the trade on the reverse crossover of the 5 & 10 SMA
Sell (Short) Trade Setup Rules
Entry
- Price and the 5 & 10 SMAs should be below the 200 SMA
- Fast Stochastic should be below the Slow Stochastic line
- 5 SMA should cross below the 10 SMA
- Fast Stochastic should be crossing below 50
- Enter at the close of the candle corresponding the confluence of the above rules
Stop Loss
- Set the stop loss above the 10 SMA
Exit/Take Profit
- Option 1: Set the take profit at 2x the risk on the stop loss
- Option 2: Close the trade on the reverse crossover of the 5 & 10 SMA
How to download and install an indicator?
In order to install the indicator on your MT4 platform, you need to follow these steps:
- Click on “Download Indicator” button located at the bottom of the post.
- Save the file to your computer.
- Extract and move the files into MT4>Indicator folder of the MetaTrader4 software file directory.
- Restart your Metatrader platform.
- Navigate to “Indicators.”
- And select “Confirmed Crossover Forex Trading Strategy” template to apply it on the chart.
Note: This indicator was developed by T. Morris. AtoZ Markets does not carry any copyrights over this trading tool.
