SMMA Crossover Signal Indicator for MT4

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SMMA Crossover Signal Indicator for MT4

Introduction to the SMMA Crossover Signal Indicator

Moving average crossovers is one of the ways traders can objectively identify trend reversals. However, most moving average lines tend to be too susceptible to market noise and price spikes which often create false trend reversal signals.

The SMMA Crossover Signal Indicator is an attempt at a crossover signal indicator which is less susceptible to market noise.

What is the SMMA Crossover Signal Indicator?

The SMMA Crossover Signal Indicator is a trend reversal signal indicator based on the Smoothed Moving Average (SMMA).

Moving average lines are usually either too lagging or too susceptible to market noise and price spikes. The SMMA line was developed with the aim of reducing market noise by smoothening out the moving average line. This creates a moving average line that is less susceptible to false signals.

The SMMA Crossover Signal Indicator plots arrows pointing the direction of a trend reversal based on the crossing over of two SMMA lines.

SMMA Crossover Signal Indicator for MT4

How the SMMA Crossover Signal Indicator Works?

The SMMA Crossover Signal Indicator has an underlying pair of SMMA lines within its algorithm. It uses the crossing over of the underlying SMMA lines as a basis for identifying trend reversals. It plots an arrow pointing up whenever the faster SMMA lines crosses above the slower SMMA line, and an arrow pointing down whenever the faster SMMA line crosses below the slower SMMA line.

How to use the SMMA Crossover Signal Indicator for MT4

The SMMA Crossover Signal Indicator has two variables which allow traders to tweak the sensitivity of the SMMA Crossover Signal Indicator.

The “Faster SMMA” and “Slower SMMA” variables allow traders to modify the number of periods used for computing the two underlying SMMA lines. This changes the sensitivity of the signals produced by the SMMA Crossover Signal Indicator.

How the SMMA Crossover Signal Indicator Works

This indicator can be used as a trend reversal signal indicator, as it was intended to be used. However, it is best used in confluence with other trend reversal price action setups for better accuracy.

Buy Trade Setup

When to Enter?

Identify a diagonal resistance line on a downtrend market. Open a buy order on the confluence of a break above the resistance line and a bullish signal produced by the SMMA Crossover Signal Indicator. Set the stop loss on the support below the entry candle.

When to Exit?

Close the trade as soon as price action shows signs of a bearish trend reversal or as a bearish signal arrow appears.

How to use the SMMA Crossover Signal Indicator for MT4 - Buy Trade

Sell Trade Setup

When to Enter?

Identify a diagonal support line on an uptrend market. Open a sell order on the confluence of a drop below the resistance line and a bearish signal produced by the SMMA Crossover Signal Indicator. Set the stop loss on the resistance above the entry candle.

When to Exit?

Close the trade as soon as price action shows signs of a bullish trend reversal or as a bullish signal arrow appears.

How to use the SMMA Crossover Signal Indicator for MT4 - Sell Trade

Conclusion

The SMMA line was developed with the aim of reducing market noise, not decreasing lag. As such, the signal that this indicator produces can sometimes be lagging. However, this can be modified by adjusting the periods used on the underlying SMMA lines. It is also best to use the signals in confluence with price action based trend reversals.

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SMMA Crossover Signal Indicator for MT4

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