Trading Strategy

Crossover Trading Strategy

Crossover Technical Indicator | Intraday or BTST Trading Strategy | Death Cross Technical Indicator | Trading Strategy for Bearsh Market | Golden Cross Technical Indicator | Short Term Trading Strategy | 15DMA 50DMA SELL | 50DMA 200DMA BUY | 15DMA 50DMA BUY | 5DMA 15DMA Sell

A Crossover is a Trading Strategy. It is based on moving average of different time frame. This trading pattern is used by traders to identify the short term market trend.

Mostly intraday, BTST trader and Swing traders use this indicator to take Buy or Sell call.

Crossover Trading Strategy

Cross over is generally used by traders in 2 different time frames.

  1. 20 Day Moving Average 

 The most popular crossover time frame is a 20-day moving average. If a particular stock falls below its 20-day moving average indicates a bearish trend and if the stock cross above its 20-day moving average indicates the bullish trend

Entry Point

A particular stock cross above 20 DMA = BUY

Stock falls below its 20 DMA = SELL

Stop Loss

BUY: Lowest point of the pattern

SELL: The Highest point of the pattern

Target Price

BUY: Target price is at the immediate resistance level.

SELL: Target price is at the immediate support level

Note: Use trailing stop loss along with stop loss to secure your profit.

  1. Combination of 5-day & 15 Day Moving Average:

 Often day trader uses the combination of 5-day moving average with the 15-day moving average.

When 5-day moving average cross above 15-day moving average indicates a bullish trend or uptrend and expected to form the higher high and lower low pattern.

If 5-day moving average fall below 15-day moving average indicates a bearish trend or downtrend and expected to form a lower high and lower low pattern.

Entry Point

5 DMA cross above 15 DMA= BUY

5 DMA falls below15 DMA = SELL

Stop Loss

BUY: Lowest point of the pattern

SELL: The Highest point of the pattern

Target Price

BUY: Target price is at the immediate resistance level.

SELL: Target price is at the immediate support level

Note: Use trailing stop loss along with stop loss to secure your profit.

CROSSOVER STOCK SCREENER

Stock Screener | Filter the right NSE & BSE stocks to invest

Common Mistake by Traders

Technical analyst and expert always give the advice to use stop loss but over smart traders ignore it. As a result, they often made a huge loss.

It is wise to use a trailing stop loss. It will secure your profit and also help to gain maximum profit. But traders often forget to use it while trading. 

People generally not prefer to use other technical indicators with cross over. It is advisable for an intraday trader to use some technical indicators like Bollinger Bands, Volume profile, price trends, momentum, and volatility along with crossover. These technical indicators are used to filter the false signal.

Limitations

Crossover cannot be used alone some indicators that are used with a crossover are MACD, RSI and Bollinger Bands.

It is not advisable to use a crossover pattern for a longer time frame. Mostly it is used for short term period i.e. maximum 1-2 day.

If a trader or investor wants to use crossover for longer time frame then they have to use Golden Cross or Death Cross. Sometimes it gives a false signal.

So, follow the rules guys and you’ll be rewarded. Having said that, I request you to backtest the Crossover trading strategy as per your needs and requirement. You can tweak the elements I have used and see what results it produces.

I have a lot of other things that also need to be considered and those are something that I will cover in my next post.

Crossover trading strategy lets you quickly fetch some money from day trading. However, try to exit as early as possible and lock your profits.

I believe this strategy will surely help you to make money from online trading.

If you want to add some other parameters that make this strategy more profitable, then please comments below. Your views and suggestion are always welcome.

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