Day Trading Using 20 MA's

 - It is possible to use charts from 30 min up to 8hrs. The most popular for day trading are 1 hour and 4 hour charts but you will have to decide what suits you the best.

1. Look at Direction of MA. Up / Down / sideways ??? 

2. Trade with direction of MA.

3. Look for close above or below 20 ma line. Some traders wait for 2 closes above or below the ma.

- Using this system alone will not work all the time as you can see by the false signals given in the chart opposite below.

 - The longer the time frame of chart the less false signals. 

 - The longer the time frame of chart the more powerful the signal.

 - With this method it is important to add at least one other, preferably 2, technical indicators to help with decision making. 

 - If one of my ranges happens to coincide with the 20 ma on a 4hr chart, it is a good sign of a good entry level around that area with tightish stops.

 - This is where the direction of the 20 ma may help you eliminate some false signals.

TOP

Daily 5 ma Trading

- This method is suited to the longer term trader but it is worth noting on a daily basis and variations can be applied to suit day traders.

 - This method is exactly like the 20 ma method as it uses a close above/below the 5ma on a daily chart as entry and exit levels.

 - The Chart opposite is an example of a close below. 

 - This is generating a sell or short signal.

 - Notice that although on several occasions the 5 ma is breached by the price but it does NOT close above it.

 - Some traders prefer to wait for 2 closes above before entering the market.

- Please note that it is possible to enter the market after it has closed above or below. Use the 5 ma as your entry point.

- The chart opposite shows a close above the 5 ma thus creating a buy or long signal.

 - Notice that although on several occasions the 5 ma is breached by the price but it does NOT close below it.

 - Again some traders prefer to wait for 2 closes above before entering the market.

 - Once again like ALL trading systems false signals can and WILL occur as the chart opposite illustrates.

 - Although profits were possible on these crossing there is a good chance that the trade may have been stopped next day.

 - The best advice is to stand aside from markets when it is trading sideways.

TOP

Daily 5 and 20 ma Crossovers

 -  This really is a powerful signal that should be duly noted when it occurs. 

 - When this does occur a major trend reversal may be iminent.

 - Chart opposite is a good example of this system

 - It is generating a sell or short signal

 - Notice it occurs much latter than the closing below of the 5 ma but it coincides with the second closing below.

 - Please note that the 20ma direction has started to trend down

 - When using live charts sometimes the ma's will crossover and then cross back again giving the occasional false signal.

- Chart opposite is for USD / JPY

 - This is a buy or long signal.

 - Notice once again that the crossing of the ma's coincides with the second closing above the 5 ma.

- Please note that the 20ma direction has started to trend up.

- Once again like ALL trading systems false signals can and WILL occur as the chart opposite illustrates.

 - Although profits were possible on these crossing there is a good chance that profits may have been short lived or worse, given back

 - The best advice is to stand aside from markets when it is trading sideways.

 - I have tried to include dates at bottom of charts for your reference. All charts used here are USD /JPY.