Technical Analysis | by IndicatorForex.com | Sunday, 15 April 2012 13:13 UTCOne of the most popular Forex indicator is the moving average - and any newbie hears about the MA crossover strategy and how profitable it is. Well, sorry to burst the bubble but it is not profitable, and this indicator is lagging after price - meaning that most of your signals will be late. However, there are several more extreme trading methods that use the moving average for highly accurate trading signals, having up to 80% win rate. In this article we will cover several of these power methods.
Power Method #1: MA Bounce
The first method is for trending periods, and it include waiting for price to retrace to ther moving average (confirm that the moving average is sloped and not flat) and bounces off it. Once the bounce is confirmed and price proceeds to continue the previous trend - we join the trend at a tactical point and profit. This is a very powerful trading method that can get you in trends with little risk and very high reward, and it is very accurate. It doesn't require any other Forex trading system besides the MA.
Power Method #2: Trend\Range
One can use the moving average to determine if price is in a trend or range in a 100% mechanical way. To do that, take a look at the angle of the moving average. If it is flat, it means that price is in a range and you should not attempt to trade trends. If the angle is sloped it means that price is in a trend and we can look for places to join the trend and profit.
Power Method #3: Bunny Girl
The Bunny girl method, or the BGX, is a bounce method with a special filter that causes trades to be extra accurate. The filter is very simple yet powerful: instead of entering at the market price, we put an order beyond current price, 20 pips from the current price, in the direction of the trend. This serves as extra-confirmation that the trend is indeed strong and that we can enter the trade. This can increase the win rate of trades up to 90%, so it is recommended.
In conclusion, the Moving Average, despite being a bit under-rated, can provide very good signals in many Forex pairs, stocks and commodities. Using just the 3 set-ups described in this article you can find yourself profiting in many markets with ease and consistency.
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