A trader can use many strategies to find the best trade entry points. But to choose the strategy that works for him, he needs to get to know various ones, try them and finally pick a few. So today, I want to present a strategy that is based on two indicators, a Simple Moving Average and an Awesome Oscillator.
Key Takeaways🔑
| →The combination of SMA and Awesome Oscillator can aid in spotting potential trade entry points. |
| →Understanding and mastering this strategy requires patience, practice, and careful study. |
| →This strategy should be tested in a controlled environment, like a demo account, before applying it to a real account. |
Contents
How to get started
First, you will have to decide upon an asset you would like to trade and then choose the type of chart. I recommend Japanese candlesticks as it is very transparent and easy to follow. Set the period of candles for 5 minutes.
Next, you will have to set the indicators on the chart. Go to the indicators feature and choose SMA from the trend indicators. The default period is 10 and the color yellow. Change the period to 100. The color and thickness of the line are up to your preferences.
The Awesome Oscillator you will find further down the list of the indicators among oscillators. You may leave the default settings as all you can do here is changing the colors.
Using a combination of the SMA and the Awesome Oscillator for a long position at Olymp Trade
Your main task is to observe the chart. Once you notice the uptrend, follow the SMA line. When the price will cross the line check the Awesome Oscillator. A green bar on the AO histogram is a confirmation of the signal to enter a long position. With 5-minute candles you can open a fixed-time financial derivative for a longer time, we usually use 25 minutes so it gives five 5-minute candles.
Pros and Cons👍👎
Pros:
- Combining two indicators can help identify more accurate entry points.
- This strategy is flexible and can be used with various assets and chart types.
- The Awesome Oscillator and SMA are widely available on most trading platforms.
Cons:
- This strategy requires constant chart monitoring, which can be time-consuming.
- The strategy may not work as effectively in a sideways or consolidating market.
- False signals can occur, especially in volatile market conditions.
Trading Strategy Comparison
| Trading Strategy | Main Strength |
|---|---|
| SMA and Awesome Oscillator | Identifies potential entry points with the help of two indicators. |
| Bollinger Bands | Gives insights about volatility and potential price levels to buy or sell. |
Using a combination of the SMA and the Awesome Oscillator for a short position at Olymp Trade
Watch the SMA closely. You are looking for a moment when the bearish candle will intersect it. Once it happens, you ought to check the Awesome Oscillator. When the bar on the histogram is red in color on the candle that crossed SMA, you have got the confirmation of the developing downtrend, thus you should enter a short position. It can be as long as 25 minutes.
Trading with indicators’ help is quite simple. You just need to know how to set the indicators properly and what are the best combinations. The Simple Moving Average works nicely with the Awesome Oscillator. Check it out on your Olymp Trade demo account.
You can also try it out on your real account, but you must be very wary of losses. There’s no magic strategy that will make you big money immediately. What you need to do is diligently study, practice, and patiently deal with losses whenever they happen despite your preparations.
Good luck!
FAQs
- Q: Can this strategy be used for any asset?
A: Yes, it’s a versatile strategy and can be applied to various assets. - Q: How can I prevent false signals?
A: False signals can’t be entirely prevented but can be minimized by practicing and understanding the strategy thoroughly before live trading. - Q: Can I use this strategy with other chart types?
A: Yes, while this post uses Japanese candlesticks, the strategy could be used with other types of charts. - Q: How often do I need to monitor the chart?
A: Monitoring depends on your trading style. Some traders may monitor constantly, while others may check at set intervals. - Q: Can I use a different time frame?
A: Yes, but remember that changing the time frame may affect the strategy’s effectiveness. It’s best to test different time frames in a demo account first.