20 and 200 SMA Trading

20 and 200 SMA Trading, we will use 20 Period - Simple Moving Average (SMA20), 200 Period Simple Moving Average – (SMA200) and candlestick patterns to determine the entry point, exit point, and stop loss point. This system is suggested to use with 1H, 4h and daily timeframe. The rules are as follows:

Enter your short position when:

- SMA 20 below SMA 200;

- Price falling below SMA 20;

- Watch out for candlestick pattern to confirm the trend;

- Exit when price hits back SMA 20;

- Place stop loss at previous swing high.

Enter your long position when:

- SMA 20 above SMA 200;

- Price rising above SMA 20;

- Watch out for candlestick pattern to confirm the trend;

- Exit when price hits back SMA 20;

- Place stop loss at previous swing low.

Long Trade Example:

In this example, the 20-SMA stays above the 200-SMA. At the time, the price set up a Reversal Momentum pattern signals that a reversal may occur. The price starts to rise above the SMA 20 and the second bullish candle confirms our assumption. Weenter our long position with stop loss set the lowest in the swing and exit when price hits the 20-SMA again.

Short Trade Example:

In this example, the 20-SMA drops below the 200-SMA. At the time the price set up a Spinning Top pattern signals that a reversal may occur. The price starts to drop below the SMA 20 and the second bearish candle confirms our assumption. We enterour short position with stop loss set the highest in the swing and exit when price hits the 20-SMA.