The Simple Moving Average is a commonly used tool by traders to analyze the general trend of the price. The SMA is a trend indicator that smooths price movements to filter out the noise of an asset.
Traders frequently use this indicator to open and close trades through moving averages crossovers, and to find supports and resistances in different time frames.
These crossovers are generated by predefining two moving averages, a slow and a fast one. The slow SMA takes into account a larger amount of periods, then catching the general trend of the asset. And the fast SMA is calculated with fewer periods, reacting quicker to price movements.
During a bearish trend, when the fast SMA crosses the slow one upward, the trend is likely to have a reversal or correction and signals a buy. However, in a bullish trend and the fast SMA crosses the slow one downward, we will get a selling point.
What strategies does Bottrex provide for this indicator?
- Default: The robot checks that the last 2 closed candles are above ALL SMAs. It also checks if the antepenultimate candle (third) is below all SMAs. For sales strategy, he does the opposite.
- Default (any period): Same function as the "Default" strategy, with the difference that you execute the buy if the condition is favorable in ANY Sma. For sell strategy, it does the opposite way.
- Default (with verification): You define a period and the bot will then check if the current price is Above All SMA's and if the price was Below All SMA's in previous candles (For the period defined by the user). For example: Period 10. The bot checks if the current price is above all SMAs and checks the last 10 candles if the price was below SMAs. For sell strategy, it does the opposite way.
- Upward crossing: Checks whether there was an upward crossing from the smallest to the largest emu.
- Downward crossing: Checks if there was a downward crossing from the smallest to the largest emu.
- Alignment (buy): When the largest SMAs are below the smallest. For example, 305 below 144, 144 below 72, 72 below 17
- Alignment (sell): When the largest SMAs are above the smallest. For example, 305 above 144, 144 above 72, 72 above 17
- Price above smas: It gives a favorable condition when the current and penultimate price are above all SMAs (without checking previous periods).
- Price below smas: It gives a favorable condition when the current and penultimate price are below all SMAs (without checking previous periods).