Secret #2: Moving Average Crossover works best when you trade many different markets
The reason is simple…
It’s because you know that this strategy makes money during trending periods.
And if you trade more markets, you can capture more trends.
Secret #3: Focus on the concept, and not the parameters
A big mistake that traders make is that they focus a lot on the parameters.
If you would only change the parameters of the moving averages such as the 50MA and 200MA to 35MA and 189MA…
The strategy will never work.
This is what we call curve fitting.
It's like memorizing the answers to last year’s examination paper.
If you take the test this year, what are the chances that the questions and answers appearing in this year’s examination are the same?
Very unlikely, right?
And it's the same for curve fitting this moving average crossover strategy.
But if you don’t memorize the answers but understand the concept behind the questions…
No matter how they change the questions in your next examination, you will still be able to answer it without memorizing the answers.
This is the point that I’m trying to bring across, it’s to focus on the concept and not the parameters.
And as a trader, there are many different concepts out there.
For example, the concept that I just shared with you is about market exposure.
The concept of market exposure
It’s when you expose your trading system to more markets so that you can increase the odds of riding trends and making more money.
Now, this concept is definitely for the moving average cross over.
But that's not the only way…
The concept of trend filters
If you are a pullback trader and want to buy pullbacks in an uptrend and short pullbacks in a downtrend…
You want to have a trend filter to objectively define trends that make sure you are trading in the direction of the trend.
The concept of market volatility
Now, what if you tend to buy breakouts and you realize that the market always reverses after you buy the breakout.
Well, maybe that’s because you're buying a breakout when the volatility is high and the market has exhausted itself.
So, why not consider buying breakouts when volatility is low or when the market is still in a tight range?
Buying breakouts in such a market environment might be more profitable for you.
So that’s yet another concept with market volatility.
With that said, let’s do a quick summary…