There are plenty of tools in technical analysis. One of them is called the Simple Moving Average, the SMA in short. It calculates the average price of the asset. The SMA is widely used in technical analysis, however, mind that a single moving average cannot be characterized as the most accurate tool. It does not collect many price points to calculate the average, which results in some delay. But it is enough to add one more SMA to receive a perfect tool for identifying points of the trade entry.
In this guide, I will present you with the technique of trading 5-minute positions with the SMA4 and the SMA30 at Olymp Trade.
Contents
Configuring the SMA4 and the SMA30 on the Olymp Trade platform
After logging in to the Olymp Trade account, choose the asset and set a 1-minute Japanese candlesticks chart. Hit the indicator icon and select the SMA. Then you can change the period, the width, and the color of the line by clicking a pen icon. Let’s change the period to 4.
In the next SMA, you will add the same way as the first one. You will only need to change the parameters. Set the period for 30 and choose a different color, so the two lines are recognizable.
How to trade 5-minute positions with a pair of the SMA indicators on the Olymp Trade platform
When to open a 5-minute long position
Observe the SMA lines. When the SMA4 is moving below the SMA30, wait until it will cross the SMA30 and begin to move above. Then wait a little more for the SMA4 to touch the bullish candle. Now is the time to enter a long position.
When to open a 5-minute short position
The SMA4 is moving above the SMA30. But at some point, it crosses the SMA30 and continues below. The best moment to enter a short position is when the SMA4 touches the first bearish candle.
Trading with the SMA4 and the SMA30 is especially beneficial on the trending markets. The volatility of the market is often increased after the release of significant news.
You have just obtained the knowledge necessary to trade 5-minutes positions with the help of the SMA4 and the SMA30 indicators. It is time to check how does it work on the Olymp Trade platform. Log into your account and practice with the demo account first. Tell us in the comments section below how to do you like this particular trading strategy.
Enjoy your trading!