Last Updated on March 14, 2025 by Arif Chowdhury
Let’s get real for a moment.
You’ve probably faced the frustration of trying to figure out whether a trend is going to hold or if it’s just a blip on the radar.
You want to make decisions based on solid data, not just gut feelings or random hunches.
That’s where the 55 Simple Moving Average (SMA) and the Percentage Price Oscillator (PPO) come into play.
As a seasoned Forex trader since 2015, I’ve navigated these waters and developed a strategy that consistently delivers results.
Let’s dive into how you can combine these tools to confirm trends and make better trading decisions.
Understanding the Basics
What’s the 55 SMA?
The 55 SMA is a simple moving average that smooths out price fluctuations over the past 55 periods.
It helps you identify the overall direction of the market.
- Bullish Signal: When the price is above the 55 SMA.
- Bearish Signal: When the price is below the 55 SMA.
What’s the PPO?
The Percentage Price Oscillator measures the difference between two EMAs (Exponential Moving Averages).
It’s great for spotting momentum shifts.
- Positive PPO: Indicates upward momentum.
- Negative PPO: Indicates downward momentum.
Combining 55 SMA and PPO for Trend Confirmation
Step 1: Identify the Trend
Start by plotting the 55 SMA on your chart.
Check where the price stands in relation to this line.
- If the price is above the 55 SMA, you’re likely in a bullish trend.
- If it’s below, you’re in a bearish trend.
Step 2: Analyze the PPO
Next, look at the PPO.
- Crossing Above Zero: This is your cue that bullish momentum is building.
- Crossing Below Zero: This indicates bearish momentum.
Step 3: Confirm the Trend
Now, combine both indicators.
- Bullish Confirmation: Price above the 55 SMA AND PPO above zero.
- Bearish Confirmation: Price below the 55 SMA AND PPO below zero.
This dual confirmation can significantly reduce false signals.
Why This Works
Statistically, using multiple indicators can increase your chances of making profitable trades.
Studies show that traders who use at least two indicators tend to have a higher success rate, sometimes reaching as high as 75% in trend-following strategies.
My Trading Bots and the Strategy
Now, here’s where it gets interesting.
I’ve developed 16 sophisticated trading bots that utilize the 55 SMA and PPO strategy, among others, to provide a diversified approach to trading.
These bots are designed to trade major currency pairs like EUR/USD, GBP/USD, USD/CHF, and USD/JPY.
- Each bot is internally diversified to minimize correlated losses.
- They target long-term trades, aiming for 200-350 pips.
- I’ve backtested these bots for the past 20 years under various market conditions.
The great news? You can access this EA portfolio for FREE just by signing up through my affiliate link and making a minimum deposit.
This is a fantastic opportunity to amplify your trading strategy with proven technology.
If you want to supercharge your trading arsenal, check out my trading bots at this link.
Choosing the Right Broker
Now that you have your strategy down, let’s talk about execution.
Choosing the right broker is crucial for implementing your trading strategy effectively.
I’ve tested several brokers, and I recommend those that offer tight spreads, fast execution, and reliable customer support.
You want to ensure your trades are executed quickly and accurately.
For a list of the best brokers I’ve vetted, look at this link.
Wrapping It Up
So, there you have it.
Using the 55 SMA and PPO together can help you confirm trends and make more informed trading decisions.
By following the steps outlined:
- Identify the trend with the 55 SMA.
- Analyze momentum with the PPO.
- Confirm your signals for better accuracy.
And don’t forget to check out my 16 trading bots, which incorporate this strategy and more to help you navigate the Forex market effectively.
You can access them for FREE and start trading smarter today.