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.
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.
Pros and Cons of Using SMA4 and SMA30 Strategy 📈📉
- Helps to identify potential trading opportunities.
- Easy to understand and implement.
- Effective on trending markets.
- May not be as effective in volatile or choppy markets.
- May provide delayed signals due to the nature of moving averages.
- As with all strategies, it’s not foolproof and should be used alongside other analysis.
|Simplifies market price data, making it easier to interpret.||May produce false signals during high volatility.|
|Effective tool for identifying potential trend reversals.||Requires a solid understanding of the market for effective use.|
|Can be combined with other indicators for a more robust trading strategy.||Not always accurate, and may provide delayed signals.|
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!
Q&A about SMA4 and SMA30 Strategy 🙋♂️🙋♀️
- Q: Can I use the SMA4 and SMA30 strategy on any time frame?
- A: Yes, but it’s particularly effective on a 5-minute time frame.
- Q: Do I need other indicators when using the SMA4 and SMA30 strategy?
- A: While you can use this strategy on its own, combining it with other indicators can provide more reliable trading signals.
- Q: What should I do if the market is volatile?
- A: In volatile markets, this strategy can produce false signals. It’s recommended to use other forms of analysis to confirm signals.
- Q: Can I use this strategy for both long and short positions?
- A: Absolutely! The SMA4 and SMA30 strategy can help identify entry points for both long and short positions.
- Q: How can I improve my success rate with this strategy?
- A: Practice is key. Use a demo account to familiarize yourself with the strategy and understand its signals.
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