A simple trend trading strategy.........

The strategy involves using two sets of moving averages for the setup.

50 simple moving average - The signal line that triggers the trades.
100 SMA - Gives a clear trend signal.
The actual time period of the SMA depends on the chart that you use. This strategy works best on hourly and daily charts. The main premise of the strategy is to buy or sell only when the price crosses the moving averages in the direction of the trend.

Rules for a Long:

Wait for the currency to trade above both the 50 SMA and 100 SMA.
Once the price has broken above the closest SMA, enter long if MACD has crossed to positive within the last five bars, otherwise wait for the next MACD signal.
Set the initial stop at a five-bar low from the entry.
Exit half of the position at two times risk; move the stop to breakeven.
Exit the second half when the price breaks below the 50 SMA.

Rules for a Short:

Wait for the currency to trade below both the 50 SMA and 100 SMA.
Once the price has broken below the closest SMA, enter short if MACD has crossed to negative within the last five bars; otherwise, wait for the next MACD signal.
Set the initial stop at five-bar high from entry.
Exit half of the position at two times risk; move the stop to breakeven.
Exit the remaining position when the price breaks back above the 50 SMA. Do not take the trade if the price is simply trading between the 50 SMA and 100 SMA.


This strategy is far from foolproof. As with many trend-trading strategies, it works best on currencies or time frames that trend well. Therefore, it is difficult to implement this strategy on currencies that are typically range bound. Traders implementing this strategy should make sure they do so only on currency pairs that typically trend. This strategy works particularly well on the majors. Traders could also check the strength of the breakdown below the moving average at the point of entry - using an indicator such as the ADX for example.