فوركس ساتو

“method 2”, of how
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traders use these MA lines. This simply involves having two MA lines (either
simple or exponential) an observing when the two lines cross. The chart
below shows EUR/USD hourly candles with a 5 period (yellow) and 20 period
(green) SMA. The numbers 5 and 20 are commonly used for this method on
various timeframes, but you can play around with other combinations.
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How traders use these crossing pairs of MA lines is they observe when the
smaller period line crosses over the larger period line and they attempt to trade
in the suggested direction (which way the small line crossed; up or down), and
preferably when the market is moving in the direction of the prevalent trend
(as you’ll notice that the lines may briefly cross opposite the direction of the
trend in retracements).
Though many traders are familiar with the concept of this method, most are
also familiar with its major drawback – the drawback is that it is a “lagging
indicator”. This means that it clearly shows the direction of the market, but
only AFTER it has already begun to do so. This indicator has little predictive
power, and often once the opportunity is recognized the trader may only jump
into a trade late in the game; often too late. That said it does still have value
as when properly done a few nice trades can more than compensate for a few
losers, or breakeven trades.
The next section will explain a technique I’ve developed called “S.E.X.
Lines” which takes the concepts discussed above, combines them, and
expands upon these concepts to provide a more advanced technique to take
advantage of all the individual uses of MA lines. This synergistic
combination in fact adds an additional perspective useful to analyzing the
actions of the market.
Before I complete this section I’d like to point out that though I’ve stated that
the MA line methods explained in this section are rather simple and common
knowledge to most traders, they are still powerful techniques. Later in this
eBook we will revisit and touch upon this subject to see how these concepts
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