Moving Average Trading Strategies
Moving averages are among the most widely used technical indicators in forex trading. They smooth out price action and help identify trends, support/resistance levels, and entry signals.
SMA vs EMA: What’s the Difference?
Simple Moving Average (SMA):
- Calculates the average of closing prices over N periods
- Equal weight to all data points
- Slower to react to price changes
- Better for identifying long-term trends
Exponential Moving Average (EMA):
- Gives more weight to recent prices
- Reacts faster to price changes
- Better for shorter-term trading and entry timing
- Used in our SteadyPips EA (12/26/200 EMAs)
The Golden Cross & Death Cross
Golden Cross: When a shorter-term MA crosses ABOVE a longer-term MA — bullish signal
Death Cross: When a shorter-term MA crosses BELOW a longer-term MA — bearish signal
Popular combinations:
- 50 SMA crossing 200 SMA (long-term)
- 12 EMA crossing 26 EMA (medium-term, used by SteadyPips)
- 5 EMA crossing 20 EMA (short-term)
Strategy 1: Dual EMA Crossover
This is the core strategy behind our SteadyPips EA.
Setup:
- Fast EMA: 12 periods
- Slow EMA: 26 periods
- Trend Filter: 200 EMA
Rules:
- Buy: 12 EMA crosses above 26 EMA + price above 200 EMA
- Sell: 12 EMA crosses below 26 EMA + price below 200 EMA
- Stop Loss: 1.5x ATR from entry
- Take Profit: 2.0x ATR from entry
Why it works: The 200 EMA filter ensures you only trade in the direction of the major trend, significantly improving the win rate of crossover signals.
Strategy 2: Moving Average Bounce
Setup:
- 20 EMA or 50 EMA on H4 or Daily chart
Rules:
- In an uptrend, wait for price to pull back to the MA
- Enter long when price bounces off the MA with a bullish candle
- Stop loss below the MA
- Target: previous swing high or 2:1 reward
Strategy 3: Triple Moving Average
Setup:
- Fast: 5 EMA
- Medium: 21 EMA
- Slow: 55 EMA
Rules:
- All three MAs aligned (fast > medium > slow = uptrend)
- Enter on fast MA crossing medium MA in trend direction
- Exit when fast MA crosses medium MA against you
Tips for Moving Average Trading
- Use higher timeframes for more reliable signals (H1 or H4)
- Add filters — ATR, RSI, or volume to reduce false signals
- Don’t trade in ranges — MAs generate many false signals in sideways markets
- Adjust periods for the pair and timeframe you’re trading
- Combine with price action — candlestick patterns at MA levels add confirmation
Automate Your MA Strategy
Our SteadyPips EA implements the Dual EMA Crossover strategy with:
- ATR volatility filter to avoid ranging markets
- Dynamic stop loss and take profit
- Trailing stop to lock in profits
- Automatic position sizing
Download SteadyPips EA for free →
This article is for educational purposes only and does not constitute financial advice. Past performance is not indicative of future results.