20 Pips Price Range Moving Average Strategy
The 20 pips price range moving average strategy is used with the 1 Hour chart & 15 minute chart. On this trading chart time-frames we use the 100 & 200 simple moving average technical indicator.
Both the 1 Hour and 15 minute chart timeframes will use the 100 & 200 SMA (SMA Indicator) to figure out the direction of the market price trend.
The 1 Hour chart timeframe checks the long term direction of the market price trend, upwards or downwards trend, depending on the market direction of the MAs Moving Averages. All Index trades taken should be in this trend direction.
We then use the 15 minute chart to find optimal point to enter trade transactions. Index trades are opened only when the price is within 20 pips range of the 200 simple MA, if price isn't within this pip range Stock Index trades aren't opened.
Buy Signal - Stock Index Uptrend/Bullish Market
To generate buy (bullish signals) using 20 pips MA strategy, we shall use the 1hour and 15 minute chart time-frame.
On the 1 hour chart time-frame the price of the chart should be above both the 100 & 200 simple moving average. We then move to a lower chart time-frame, 15 minute chart timeframe to generate a Index trade signal.
On 15 minute chart time-frame, when the price reaches 20 pips range above 200 SMA, we open a buy trade and place and set 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 100 SMA will be within the 20 pips range of the 200 SMA.
100 & 200 Simple Moving Average(MA) Buy Trading Signal - MA Moving Average Stock Index Strategy
Sell Signal - Index Downtrend/Bearish Market
To generate sell (short signals) using 20 pips MA strategy, we shall also use the 1 hour chart time-frame and 15 minute chart timeframe.
On the 1H chart timeframe, price should be below both the 100 & 200 SMA. We then move to the 15 minute chart time-frame to generate a Index Signal.
On 15 minute chart, when price reaches 20 pips range below 200 SMA, we open a sell trade and place a stop loss 30 pips above the 200 simple moving average.
100 & 200 Simple Moving Average(MA) Index Sell Signal - Moving Average(MA) Stock Index Trade Strategy
With this strategy method price will generally bounce of these support and resistance levels because many Index traders watch these zones, & open similar trade positions at around the same point.
These support and resistance levels act as short-term resistance/support levels within the price charts.
Profit Taking level For This Strategy
With this strategy the price will bounce and head in the direction of the original trend. This movement will vary from 60 - 70 pips.
The best Stock Index profit taking and booking level would therefore be considered to be 60 - 70 pips from the 200 SMA, Simple Moving Average.
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