Moving Average System Explained
Stock Indices 20 Pips Moving Average Indices Trading Systems
The 20 pips price range moving average indices trading strategy is used with the 1 Hour chart and 15 minute chart. On this chart timeframes we use the 100 and 200 simple moving average indices technical technical indicator.
Both the 1 Hour and 15 minute chart timeframes will use the 100 and 200 SMA (SMA Indicator) to determine the direction of the Indices trend.
The 1 Hour chart time-frame checks the long term direction of the Indices trend, upward or downward trend, depending on the direction of the moving averages. All stock indices trades taken should be in this indices trend direction.
We then use the 15 minute chart to find the optimal point to enter stock indices trades. Indices trades are opened only when the price is within 20 pips range of the 200 simple MA, if price is not within this pip range stock indices trades are not opened.
Indices Uptrend/Bullish Market
To generate buy (bullish indices trading signals) using the 20 pips moving average Indices strategy, we shall use the 1hour and 15 minute chart time frame.
On the 1 hour chart timeframe the price of the chart should be above both the 100 and 200 simple moving average. We then move to a lower chart time frame, the 15 minute chart timeframe to generate a indices signal.
On 15 minute chart timeframe, when price reaches the 20 pips range above the 200 SMA, we open a buy trade and place a stop loss 30 pips below the 200 SMA. Stop loss can be adjusted to the amount of Pips that are suitable for your risk but to avoid being stopped out by normal Indices volatility its best to use 30 pips stop loss.
A buy trade can also be opened when the price touches the 100 Simple moving average, provided it’s not very far from the 200 SMA. Normally the 100 SMA will be within the 20 pips range of the 200 SMA.
100 and 200 Simple Moving Average Buy Trading Signal - Moving Average Strategy
Indices Downtrend/Bearish Market
To generate sell (short indices trading signals) using the 20 pips moving average Indices strategy, we shall also use the 1 hour chart timeframe and 15 minute chart time frame.
On the 1 hour chart time frame, the price should be below both the 100 and 200 SMA. We then move to the 15 minute chart timeframe to generate a indices trading Signal.
On 15 minute chart, when price reaches the 20 pips range below the 200 SMA, we open a sell trade and place a stop loss 30 pips above the 200 simple moving average.
100 and 200 Simple Moving Average Sell Indices Signal - Moving Average Strategy
With this indices trading strategy method price will generally bounce of these support and resistance levels because many traders watch these levels, and open similar stock indices trades at around the same point.
These support and resistance levels act as short term resistance or support levels within the price charts.
Profit Taking level for This Strategy
With this indices trading strategy the price will bounce and make a move in direction of the original Indices trend. This move will range from 60 - 70 pips.
The best indices profit-taking level would therefore be considered to be 60 to 70 pips from the 200 SMA.
