36# MAB: Moving Average Bands Filtered by SMA slow Strategy

Submit by Joy22

MAB: Moving Average Bands Filtered SMA Strategy is a trend action strategy.

Setup strategy

Time frame 5 min or higher.

Currency pairs: volatile.

indicator Setup:

1. Moving Average Bands (MAB):

   • The "Moving Average Bands" are typically a set of bands formed around a moving average, similar to Bollinger Bands, where the upper and lower bands can act as dynamic support and resistance levels.

2. Simple Moving Average (SMA) - 150 Periods:

   • This acts as a trend filter, where trades are only taken in the direction of the overall trend indicated by the SMA.

Entry Rules:

Buy Entry:

1. Trend Filter:

   • The price must be above the 150-period SMA, indicating an overall upward trend.

2. Moving Average Bands Signal:

   • The price should touch or break below the lower or the middle band of the Moving Average Bands , signaling a potential oversold condition in the context of the prevailing uptrend.

3. Confirmation:

   • Wait for a bullish reversal candlestick pattern (e.g., a bullish engulfing, hammer, or morning star) or wait for the price to close above the purple dotted line.

Sell Entry:

1. Trend Filter:

   • The price must be below the 150-period SMA, indicating an overall downward trend.

2. Moving Average Bands Signal:

   • The price should touch or break above the middle or upper band of the Moving Average Bands, signaling a potential overbought condition in the context of the prevailing downtrend.

3. Confirmation:

Exit Rules:

Buy Exit:

1. Take Profit:

2. Stop Loss:

   • Place a stop loss just below the lower band of the Moving Average Bands.

Sell Exit:

1. Take Profit:

   • Set the take profit with a fixed risk-reward ratio of 1:1.3 to 1:1.5.

2. Stop Loss:

   • Place a stop loss just above the upper band of the Moving Average Bands. 

Risk Management:

• Position Sizing:

  • Use a position size that risks no more than 1-2% of your account balance on each trade.

• Trade Frequency:

  • Limit trades to when clear signals form, aiming for quality over quantity. Avoid overtrading in choppy market conditions.

Additional Considerations:

• Avoid Trading in a Sideways Market:

  • If the price is constantly crossing above and below the 150-period SMA with no clear direction, avoid taking trades. This suggests a range-bound market where this trend-following strategy may perform poorly.

• News and Events:

  • Avoid trading around major news releases that could cause significant volatility and lead to whipsaws in price.

This strategy provides a systematic approach to trading with the Moving Average Bands, filtered by the long-term trend defined by the 150-period SMA. The filter ensures that you are trading in the direction of the trend, while the bands help you time entries based on overbought or oversold conditions.