The 3 Moving Average MA Cross with Alert Indicator For MT4
I think the Moving Average crossover strategy is one of the oldest and most basic strategies there is. Normally this strategy only consists of two Moving Averages and enters trades based on the cross of the MAs. The 3 Moving Average MA Cross with Alert Indicator For MT4 however uses three Moving Averages and thus will probably perform better than strategies that only use two. The indicator doesn’t display the Moving Average to not confuse you but draws red and green arrows to show you the crossover and thus the entry signal.
In this article I will first quickly explain the basics of the strategy based on the 3 Moving Average MA Cross with Alert Indicator For MT4. Afterwards I will tell you about its different settings. In the end you will learn how you should combine this indicator with others to maximize your profits.
Basics of the Moving Average crossover strategy
The Moving Average crossover strategies are using multiple MAs at the same time, each with a different period. Typically, there is one very fast EMA (red) that is used for entry signals and a slow EMA (blue) to better capture the overall trend. However, the 3 Moving Average MA Cross with Alert Indicator For MT4 also uses a third Moving Average with a medium period (green) to filter the entry signals and thus prevent some losing trades.
This strategy generates long signals once the following conditions are met. The medium EMA (green) must be above the slow EMA (blue). If the fast EMA now crosses the medium EMA to the upside the long signal is triggered and the 3 Moving Average MA Cross with Alert Indicator For MT4 draws a red upward arrow. The opposite is true for short signals. The medium Moving Average must be below the slow MA and then the fast Moving Average crosses both these lines.
You can see in the screenshot above, that the chart gets rather confusing with all these Moving Averages, so it is very good that the 3 Moving Average MA Cross with Alert Indicator For MT4 only displays arrows at the important crossovers and keeps the chart clean otherwise.
Settings of the 3 Moving Average MA Cross with Alert Indicator For MT4
The settings of the 3 Moving Average MA Cross with Alert Indicator For MT4 are simple and repeat themselves. Technically they only consist of the settings of three Moving Averages and one to configure the alert feature.
For each MA you can first choose the period. In the next line you can configure the shift and the last setting defines the Moving Average method. With a 0 the indicator uses a simple Moving Average, with 1 it uses an EMA, a 2 sets a smoothed Moving Average and a 3 a linear weighted MA. I would suggest that you experiment a little with these settings and figure out which Moving Average combination you like the most.
The last setting is used to turn the alert function of the 3 Moving Average MA Cross with Alert Indicator For MT4 off (0) and on (1). With the alerts switched on, you will receive an alert every time the indicator draws an arrow, which means every time a crossover happens. This feature is a great addition, since it can safe you a lot of time, because you don’t have to be in front of the charts all day.
Trading with the 3 Moving Average MA Cross with Alert Indicator For MT4
This indicator, while powerful on its own, is best used in combination with another indicator. This indicator can be any indicator you like. For this article I decided to use the popular MACD indicator. This tool can help us to find divergence, which is an extremely strong indication of an imminent change of the market direction.
So, for this strategy we first wait for a divergence to develop or just check it once we get an entry signal. If we get a signal and there was divergence previously and not too far away from the current price, we can enter a trade in the according direction. Because we have divergence to add an edge to our entry, the trade is likely to end as a winner and at the same time, as you can see in the picture, these trades can produce extremely large wins.
The trade management depends purely on your trading style and what you feel comfortable with. One idea for the target placement is for example to wait for a divergence against our position.