If you are already in an open position then that is your stop/limit and new position signal.
It’s useful over any time frame, although the shorter the time frame the more likely you are to get false signals. The daily chart below shows the EUR/USD, you can also see that this strategy works well when price action maintains a trend and not so well when price is moving sideways. The idea is to back test sets of 3 numbers to see which gives the least false signals.
I like to use Fibonacci numbers 13, 21 and 34 on a daily chart, then tweak accordingly.
Both the Simple Moving Average and Exponential Moving Average (SMA & EMA) crossover systems benefit from being easy to learn and producing consistent input signals.
The two main events even have their own names: The golden cross is bullish and refers to an event where the 50-day moving average moves above the 200-day moving average for the first time. The death cross is bearish and is the reverse: This happens when the 50-day moving average crosses down below the 200-day line.
These can produce useful input signals to your trading system.
Posted by zenkick