If you’re looking for a simple strategy, this article is for you! We are going to focus on some examples based on the simple SMA strategy. We will see or identify if it really works by adding exponential moving average and changing the period to 20. You’ll learn a lot, which is GREAT!
How does this simple strategy work?
This simple strategy is very common, and many people are using it. The way in which the strategy works is very simple. Every time the candles touch the 20 EMA you go in the opposite direction. If it touches above you go to buy a call position, if it touches below you go to a buy position. As simple as that!
So, let’s identify if it really is feasible or not and for us to continue and enter positions, we will have to use the ATR. This, to be able to identify the loss, we are going to clarify downtrends and that is how the strategy works. Amazing right?
Cristian AP tried this simple strategy!
As we can see in the video below, Cristian AP placed some positions with this strategy. He started by placing the entry point and the ATR at number 22. Then it means that 44 should be our stop loss.
Which risk/reward should we use?
As we can see, to work with this strategy, a risk/reward ratio of 2.0 will be used, working on GBPUSD. Cristian AP was entering a new position that was becoming a downtrend. So, he was looking for the ATR and again it says 24. This means the stop loss is 48 and always with a risk/reward ratio of 2.0.
So, we will enter where it says 44. That’s the stop loss, and it will be a sell position. You can see more examples in the video below! And that is the correct setup for this simple strategy!
Recommendation before using this strategy!
Now we would like to give you some recommendations before you use this simple strategy:
-Practice on a demo account.
-This information is not enough! Keep studying.
-Always check the news before you trade.
-Make sure to enter the right set up.
Conclusion
The question everyone wants to be answered is, does the strategy work? It works and it’s as simple as the training positions!
So, make sure to also watch the video below so you can know more examples of this strategy. You’ll make a lot of money with it! We hope you have liked this article, don´t forget to share it!