Triple Moving Average Crossover Strategy

Triple Moving Average Crossover Strategy
Triple Moving Average Crossover Strategy

Here’s a common twist to the standard MA crossover: A triple Moving Average Crossover. The added MA helps avoid false signals commonly encountered in the standard MA crossover.

Setup

10 EMA (fast)
25 EMA (medium)
50 EMA (slow)

Entry

When the fast EMA crosses over the medium EMA, and then through the slow EMA, enter in the direction of the fast EMA.

Exit

Exit when the fast EMA touches the medium EMA or
Exit when the fast EMA crosses over the medium EMA.

Remember to wait till the current bar has closed before taking the exit signal.

Place the initial stop loss at the latest swing high/low.

Triple Moving Average Crossover Strategy

Triple Moving Average Crossover Strategy

Currency Pairs

Any

Variations

Fast Moving Average Settings for shorter time frames. (15 min – 1 hour)

  • 10 EMA, 25 EMA, 50 EMA
  • 4 EMA, 9 EMA, 18 EMA

Slow Moving Average Settings for longer time frames (1 hour – 1 week)

  • 17 SMA, 14 SMA, 21 SMA
  • 5 SMA, 10 SMA, 20 SMA
  • 4 SMA, 10 SMA, 50 SMA

Simple vs Exponential

Simple Moving Averages (SMA) have more lag. These are more suited for trading on longer time frames (over 1 hour). These can also be used to help identify support and resistance areas, especially the 200 SMA.

Exponential Moving Averages (EMA) have less lag. These are more suited for trading on shorter time frames (under 1 hour).

Pros

  • Simple and easy to follow.
  • Easy to automate.
  • Very profitable in trending markets.

Cons

  • Doesn’t work well in ranging markets. Can lead to numerous false signals. Avoid using this strategy during ranging markets.
  • Requires monitoring after every new bar has closed. Remember to wait till the current bar has closed before taking any action. Signals can change frequently if you are watching the graph tick by tick.

Backtesting

link -> backtesting results.

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