Successful trading is often described as minimizing the risk with respect to the reward, or upside. Any trading strategy should have a disciplined method of limiting risk while making the most out of favorable market moves. eg. the forexplane, where the traders can also maintain a Diary for free in the trading blogs, explains about a Simple Moving Average ("SMA") technical study. It is based on a 12-period SMA, where each period is of 15 minutes. We encourage any trader to research other strategies as thoroughly as possible. We will use a simple algorithm: when the price of the currency crosses above the 12-period SMA, it will be taken as a signal to buy at the market. When the currency price crosses below the 12-period SMA, it will be a signal to "Stop and Reverse" ("SAR"). In other words, a long position will be liquidated and a short position will be established, both with market orders. Through this system traders will be on alert - he will always have either a long or short position after the first signal.
