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How To Trade Simple Moving Average Crossover
Enter trades. Let them play out. Profit.

Those are the goals of trading.

But if you’ve never traded before — or maybe you’re not profitable yet — those seven little words can be extremely intimidating.

Trading isn’t as easy as it sounds.

Here’s the good news: While it can be difficult to trade, it’s not impossible.

This strategy is perfect to use when you want to define the current big picture trend and also give you an idea when to go long or short. 

The moving average is the most popular trading indicator used by traders.

Important: Do not simply go short or long when you get the crossover, price action will be extended so it is better to wait for a retrace to a resistance or support area before you take the entry.

Here's how to trade the golden cross strategy.
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The moving averages we will look at is the simple moving average 50 periods and the 200 periods and as you can see in the example below when we have a downtrend the 50 moving average will be below the 200 moving average and when we have an uptrend the 50 moving average will be above the 200 moving average.

You can see that the 200 moving average is the blank line and the blue one is the 50 moving average.
How To Trade The Simple Moving Average Crossover Strategy MA50 MA200 Chart Example
The 50 moving average is adopting faster to new price movements so it follows price faster if we have a quick down move the 50 moving average will start sloping faster and steeper than the 20 moving average will.

Moving average can be used for both support and resistance levels and as trend indication. 

One of the best moving average strategy is the crossover strategy namely the Golden Cross. The Golden Cross is when the 50 moving average cross over the 200 moving average from below this a bullish sign that the trend might be changing from bearish to bullish. 
How To Trade The Simple Moving Average Crossover Strategy MA50 MA200 Chart Example
An important note here is you will probably not be profitable trading this strategy just as a buy signal when the 50 moving average crossover the 200 moving average because you will probably be in too late. So what I recommend is when you get the crossover wait for a retrace to support level and take entry on that support level. 

Same is true for the bearish Golden Cross, so when the 50 moving average cross over the 200 average from above you get a bearish Golden Cross and you don't want to take entry when you have the cross, you want to wait for a retrace. 
How To Trade The Simple Moving Average Crossover Strategy MA50 MA200 Chart Example
Then you want to trade bearish signals as long as you have the bearish trend in check, you have the 50 moving average below the 200 moving average. You can continue to trade resistance levels and go short at them.
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Uptrend - Buy at support as long as MA 50 is above MA 200.

Downtrend - Sell at resistance as long as MA 50 is below MA 200.

Trend Reversal (Downtrend to Uptrend) - MA 50 crossover MA 200 from below.

Trend Reversal (Uptrend to Downtrend) - MA 50 crossover MA 200 from above.
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Johan Nordstrom Professional Trader Risk Management
I'm a family guy in my late 20's who learned how to trade the markets in a simple yet effective way. During university I studied investing and graduated with a master's degree in risk management. Quickly, I realized that I was onto something. I started helping friends and taking students. My students started getting results, spent less time in front of their screens, and their accounts grew consistently. Learn more about me here.
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