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Trading Strategy with SMA 50

The trading system we will discuss today is known as the "50 SMA Trading Strategy." This name is derived from its main indicator, the Simple Moving Average (SMA) 50. This system combines the SMA 50 with several other indicators such as RSI 14 and Daily Pivot to identify trading opportunities. Here are the details of this strategy:

Indicators Used:

  1. SMA 50: The Simple Moving Average with a period of 50 is used to determine the trend direction.
  2. RSI 14: The Relative Strength Index with a period of 14 is used to measure overbought and oversold conditions.
  3. Daily Pivot: Daily pivot points are used to determine support and resistance levels.

Time Frame and Currency Pair:

  • Time Frame: H1 or H4. The use of these time frames relates to the number of candlesticks in one day of trading.
  • Currency Pair: Any currency pair can be used, but it's better to choose pairs with sufficient volatility. For example, GBP/USD.

Trading Rules:

  • • Buy: If the price is in the RSI 20/30 area and is at a support area.
  • • Sell: If the price is in the RSI 70/80 area and is at a resistance area.
  • • Uptrend: Price is above the SMA 50.
  • • Downtrend: Price is below the SMA 50.

Uses of SMA:

  1. Determining trend direction.
  2. Identifying support and resistance levels.
  3. Smoothing out other jagged indicators.

RSI Application:
  • • Identifying overbought and oversold conditions.
  • • Detecting positive/negative divergences.
  • • Measuring price movement momentum.
Daily Pivot:

  • • Pivot: Price point where the price tends to reverse direction.
  • • Resistance: Price level that is difficult to break through, but if breached, the price can spike upwards.
  • • Support: Price level where it's difficult for the price to break down, but if breached, the price tends to fall.

By using the combination of SMA 50, RSI 14, and Daily Pivot indicators, traders can identify trading opportunities more effectively. However, as with any trading strategy, it is advisable to test it first and understand the associated risks before applying it live.


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