| Updated: September 12, 2025Forex trading strategy – combining SMA, EMA and moving average convergence divergence
You will learn about the following concepts
- Indicators used with this strategy
- Signals to look for
- Entry point
- Stop-loss
- Profit target
For this strategy, we examine the 4-hour chart of GBP/CAD. The indicators we use are: a 100-period Simple Moving Average (SMA) (blue on the chart below), a 200-period SMA (red), a 15-period SMA (white), a 5-period Exponential Moving Average (EMA) (yellow) and the Moving Average Convergence Divergence (MACD) with settings: short term – 12; long term – 26; MACD SMA – 9.
A trader should enter long when: first, the 5-period EMA crosses the 15-period SMA from below to above, after the current candle has closed; and second, the MACD lines also cross, again after the candle has closed. The MACD cross can occur either before or after the EMA/SMA cross, but no more than five candles should occur between the two crosses. The trader must abstain from entering if both crosses are not present.
The protective stop should be placed at the nearest support level, with a distance of no less than 40-45 pips. This is a precaution against sudden, large moves. Otherwise, the stop will not be triggered because the trader will already have closed his or her position.
The trader should exit his or her position only when two opposite crosses occur. If only one cross appears, the position remains active.
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- Regulation: NFA
- Leverage: Day Margin
- Min Deposit: $100
A trader should enter short when: first, the 5-period EMA crosses the 15-period SMA from above to below, after the current candle has closed; and second, the MACD lines also cross, after the candle has closed. The protective stop should be placed at the nearest resistance level, with a distance of no less than 40-45 pips.
A position should not be taken when the price is within 25 pips of either the 100-period SMA or the 200-period SMA. Conversely, if the price crosses either the 100-period or the 200-period SMA, the trader should enter the market, but only after the current candle closes on the opposite side of the simple moving average.
