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Combining SMA, RSI, and MACD for a Winning Trading Strategy

The indicators are made to help traders find the best places to get in. But nothing is perfect, and it’s not unusual for them to send a signal a little late. So, it’s not a bad idea to use another indicator to back up the signals you’re getting.

The strategy I’m going to talk about today ties together three indicators. These are the Simple Moving Average, the Relative Strength Index, and the Moving Average of Convergence and Divergence.

A strategy combining the SMA, the RSI, and the MACD

How does it work?

The RSI is the most important sign. A trader will watch its line and see when it crosses the 50 levels. The SMA shows if the price is above or below the average for a certain number of times. Just look to see if the price bars are forming below or above the SMA line. The MACD indicator is the second filter that our strategy uses. It sends out pretty strong signals when the baseline is crossed.

How to set up the indicators

You have to be signed in to your Pocket Option account. Choose the asset, set up the chart, and then click on the feature icon for the indicators. Each indicator has to be added on its own. To meet the needs of our strategy, leave all three indicators at their default settings.

Signals for opening UP trades at Pocket Option

To start a buy trade, a number of things must be true.

In the RSI window, the line with the value 50 must be crossed from below.
1-Price bars must rise above the SMA10 line.
2-The MACD indicator’s two lines have to meet under the 0 line.
3-When all of the above conditions are met, you can make a trade that will go UP for the next candlestick.

Signals for opening DOWN positions on the Pocket Option platform

To start a short trade, you must follow these rules:

1-From above, the RSI 50 line is crossed.
2-Under the SMA10 line, price bars form.
3-Over the 0 lines, the MACD lines cross each other.
Only then can you open a sell position that will work.

Final thoughts

When you add up the signals from three indicators, they are pretty strong. But they don’t happen very often. The RSI and the MACD may cross at slightly different points on the candlestick. The RSI might move around close to 50 for a long time. These are not good signs. Remember that all three things must be true for a plan to work. It takes a lot of patience to wait for a strong signal. But once you finally get the go-ahead, you may be pretty sure that the trade will be a good one.

I want you to use the free Pocket Option demo account to try out the strategy. Since there is no risk, you can take your time learning the strategy. If you have any questions or concerns, feel free to leave them in the comments section.

 

 

 

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