Yes, a lot of Forex trading tools are quite “sexy”, however this one is really simple, yet surprisingly powerful. S.E.X., as I like to call it, stands for “Simple / Exponential crosses (X)”. A lot of traders use “Simple Moving Averages” (SMA for short) and/or “Exponential Moving Averages” (EMA for short) as part of their trading toolbox, however here I’ll show you some adaptations I’ve come up with using these basic indicators. Chances are that even if you are an experienced trader you haven’t used this or a similar technique, and will probably be rather impressed by the power of it. A lot of traders are familiar with the concept of moving average crossovers, but like I said before the S.E.X. technique adaptation of MA crossovers goes a little bit further than most people have ever considered, as I’ll explain. It is common to have two SMAs or EMAs of different periods (i.e. a 10 period and a 20 period) and watch as they cross over each other. As the shorter period crosses over the longer period it shows the direction that the market is trending in. If the shorter period (i.e. 10) is above the longer period (i.e. 20) then it is because the market has been moving up. If the shorter period is below the longer one then it is because the market has been moving down. Again, this technique is commonly used by traders, and most traders know of it’s limitation – the limitation is that MA crossovers are a “lagging indicator”. Lagging means that it shows the direction the market is moving in AFTER it has started to move in that direction. Thus MA crossovers aren’t some kind of psychic predictive tool, however it still does serve the purpose to help you spot when the market changes direction to be able to respond accordingly. Let us now begin to explore how the S.E.X. lines technique works. You’ll soon see how it resembles yet differs from standard MA crossover techniques. We’ll start by looking at it’s simplest aspects and then progress to more detailed variations
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