Moving Average Intraday System

Moving Average Intraday System
The Setup:

1. Open up your trading platform and open a chart.
2. Set the instrument to the currency pair of your choice.
3. Set the chart pattern to filled candle.
4. Set the timeframe to 30 minutes
5. Set up a moving average line in your indicators menu. -set period to 11 days

Now that you have your chart setup properly, go ahead and set up your normal indicators that you use for reassurance and entrance/exit, etc. I use an MACD, a volume indicator, and Bollinger bands, but everyone has their own theory on what works and why, and everyone has a reason why your indicators don’t work when they seem to work just fine for you!

Now before I explain what you are doing with this setup I would like you to set up the chart as I have indicated, and take a good solid look at the history of the data. Do you see any telltale signs yet, or have a clue as to what the point of the setup is yet? If you do not, do not worry or feel inferior, as this has slipped past some of the best. I happen to be great with numbers and have a strong background in analysis, so I was able to pick up on this trend mostly by dumb luck but good fortune and a keen eye for detail.

Now that you have stared at your screen looking for it, I’ll explain myself. What you are looking for is the moving average line, or herein referred to as the MA, that you set up on your chart to cross through the price line. You are probably saying to yourself, “This happens like every hour or so, what gives?”. Well, it does happen fairly often, maybe not that drastically, but it does. The key point is where the MA crosses the price line. You don’t need to worry or care about it crossing the thin peaks of the high/low lines on the candle, but you want to concentrate on it crossing through the middle of the wide, filled part of the candle, the openclose
prices. And further yet, it must cross in around the middle of this center section. If it crosses at the top or bottom of the candle centre area, than you can pretty much disregard the trade. It may be profitable, but not worth the risk. Stick with thecenter of the central region and you will be much safer.

Now, when the MA indeed crosses the price line through the centre of the central wide part of the candle, a trade signal is triggered. You should try and wait at least one more candle before entering a position just to ensure that the cross wasn’t a blip on the radar and its not about to recant its previous move. The chart is set to the 30 minute timeframe, so generally wait 30 minutes or so, unless the market suddenly takes a quick shift in that direction. Then you can open the position to catch the swing.

Now to determine direction. If the MA moves from above the price line to below it, the trade is going to be long. And likewise, if the MA moves through the candle from below the price line, the trade will be short. This can be verified by checking your indicators that you have set up to corroborate with your MA. To better clarify this direction idea, if after the cross the price is below the MA, the price is most likely dropping or SHORT. If the after the cross the price is above the MA, the price is considered to be rising and the trade is LONG.

Another important factor to consider. While an MACD is a great too to determine market direction and activity, in this case it helps to build on the strength of the trend that we are pointing out here. If the MA crosses the price line from above to below, so that the trade we have forecasted is long, we can compare this with the MACD. If the MACD average lines are above the zero line, then you can expect a large climb. If the trade was reported as short, and the average lines on the MACD screen were below the zero line, you could expect to a see a rather large drop. When I say large drop or gain, I am speaking of 75, 100, 150 point gains. This is not to say that if, on a long trade for instance, the average lines on the MACD are BELOW the zero that you will NOT see a gain. It generally will provide a gain, but of 20, 30, or maybe even 50 points. Where you exit the trade is up to you and how much you can tolerate and are willing to risk. If you feel comfortable taking 30 points and are okay with yourself if it does end up going to 150 points above your buy price, then good for you. If you are a thrill-seeker and go for the 150, I wish you all the best of luck! You may or may not need it.

That’s it! It’s just that simple! If you move back through the history of the chart and look at when and where the MA crosses the price line, you can see for yourself that it seems to catch every big movement, and almost all of the smaller ones. This set can be used on the 60minute chart for mid-term trades and further yet on the daily chart for longer term setups.

Make sure that you are using your regular technical indicators to monitor market activity and ensure the trade is on target. If you are looking to enter a short and your MACD says long, or the 30 minute chart is oversold, you are asking for trouble. You need checks and balances with any system to eliminate as much of the margin of error as possible.