About the 200 SMA System Indicator
The 200 SMA System Indicator for MT4 is a comprehensive trend-following tool designed to simplify trading decisions.
It uses the 200-period Simple Moving Average as the core reference for trend direction while providing additional lines for dip and rally trading opportunities.
When price trades above the 200 SMA (yellow line), it signals bullish momentum, and traders look for buying opportunities.
Conversely, when price trades below the 200 SMA, it indicates bearish momentum, and sell trades are preferred.
The other moving average lines can help identify pullbacks in trending markets for more precise entries.
By focusing on price relative to the 200 SMA, it filters noise and helps maintain a clear bias aligned with the prevailing trend.
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Key Features
- Core trend identification with the 200 SMA (yellow line).
- Additional moving average lines for pullback and rally entries.
- Trading signals for buy and sell opportunities based on SMA crossings.
- Suitable for scalping, intraday, and swing trading strategies.
Indicator Chart
The chart shows the 200 SMA System Indicator plotted on the main price window.
The yellow 200 SMA line indicates overall trend direction, while additional lines help spot entries on dips or rallies.
Traders watch for price crossing above or below the 200 SMA line to trigger buy or sell trades, making trend alignment easy to follow.
Guide to Trade with the 200 SMA System Indicator
Buy Rules
- Confirm price is above the 200 SMA yellow line.
- Wait for price to cross and close above the 200 SMA from below.
- Open a buy trade after the close of the crossing candle.
- Trade only while price remains above the 200 SMA.
Sell Rules
- Confirm price is below the 200 SMA yellow line.
- Wait for price to cross and close below the 200 SMA from above.
- Open a sell trade after the close of the crossing candle.
- Only take trades while price remains below the 200 SMA.
Stop Loss
- Set the stop a few pips beyond the nearest swing high or low.
- Use a volatility buffer to prevent early stop-outs during strong trends.
- Consider trailing the stop when the trend moves strongly in your favor.
Take Profit
- Close the trade when price crosses back across the 200 SMA in the opposite direction.
- Take partial profits at intermediate moving averages for longer trends.
- Let trades run during strong trend momentum while protecting gains with a trailing stop.
200 SMA Trend and Smoothed RSI Forex Strategy for MT4
This MT4 forex strategy combines the 200 SMA System with the Smoothed RSI Forex Signal Indicator to create a simple yet effective trend-following approach.
The strategy focuses on trading in the direction of the dominant market trend while using momentum shifts for precise entries and exits.
The 200 SMA System defines the overall market bias.
When price stays above the yellow 200 SMA line, the market is considered bullish. When price remains below it, bearish conditions dominate.
The Smoothed RSI Forex Signal Indicator then provides timing by changing color, allowing traders to enter when momentum aligns with the trend.
This strategy works well on M15, H1, and H4 charts and is suitable for both day traders and short-term swing traders.
It performs best on major currency pairs where trends tend to be smoother and more reliable.
Buy Entry Rules
- Price is trading above the yellow 200 SMA line.
- The Smoothed RSI Forex Signal Indicator starts painting the blue colored line.
- Enter a buy trade at the close of the signal candle.
- Place the stop loss below the most recent swing low.
- Exit the trade when the Smoothed RSI changes from blue to pink.
Sell Entry Rules
- Price is trading below the yellow 200 SMA line.
- The Smoothed RSI Forex Signal Indicator starts painting the pink colored line.
- Enter a sell trade at the close of the signal candle.
- Place the stop loss above the most recent swing high.
- Exit the trade when the Smoothed RSI changes from pink to blue.
Advantages
- Clear trend direction using the widely trusted 200 SMA.
- Simple momentum-based entries and exits.
- Adapts naturally to market volatility without fixed targets.
- Works across multiple time frames and currency pairs.
- Easy to follow with minimal chart clutter.
Drawbacks
- Signals may appear late after strong impulsive moves.
- Whipsaws can occur when the price stays close to the 200 SMA.
- Less effective during sideways or low-volatility markets.
- Requires patience to wait for full trend alignment.
Case Study 1
On EURUSD H1, price remained consistently above the 200 SMA yellow line, confirming a bullish trend.
After a shallow pullback, the Smoothed RSI Forex Signal Indicator began painting the blue line.
A buy trade was entered at candle close with the stop loss placed below the recent swing low.
The trend continued steadily higher, and the trade was closed when the RSI signal turned pink, locking in approximately 38 pips.
Case Study 2
On GBPUSD H4, price traded below the 200 SMA yellow line, indicating bearish market conditions.
Following a corrective move upward, the Smoothed RSI Forex Signal Indicator switched to the pink line.
A sell position was opened at the close of the signal candle with a stop loss above the recent high.
Price moved lower in line with the trend, and the position was exited when the RSI signal turned blue, capturing around 72 pips.
Strategy Tips
- Focus on clean trends where price respects the 200 SMA consistently.
- Avoid trading when the price repeatedly crosses the 200 SMA.
- Let winning trades run until the RSI signal changes color.
- Reduce position size during high-impact news events.
- Use higher time frames to confirm overall market structure.
- Trade liquid currency pairs for smoother price action.
- Review past trades regularly to refine stop placement.
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FAQ
Is this indicator suitable for all timeframes?
Yes, it works on scalping, intraday, and swing trading charts. Higher timeframes offer more reliable trend signals.
Can I use the additional lines for pullback trading?
Yes, the extra moving averages help identify dips in uptrends or rallies in downtrends for better entry timing.
Does the 200 SMA System repaint signals?
No, once a candle closes above or below the 200 SMA, the signal is fixed.
Should I trade only in the direction of the 200 SMA?
Yes, focusing on trades that align with the SMA trend improves success and reduces countertrend losses.
Summary
The 200 SMA System Indicator simplifies trend trading by clearly showing the market’s direction with the 200 SMA yellow line.
It helps traders quickly identify bullish and bearish trends and spot high-probability entries on pullbacks or rallies using the additional moving average lines.
This system is versatile across timeframes, making it suitable for scalping, intraday, and swing trading.
By staying aligned with the SMA trend and managing risk effectively, traders can improve consistency, reduce countertrend losses, and capture strong trend moves with confidence.
