20 Pips Price Range Moving Average MA 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 & 15 minute chart time frames will use the 100 & 200 SMA (SMA Indicator) to determine the direction of the market trend.
The 1 Hour chart time frame checks the long term direction of the market trend, upwards or downwards trend, depending on the direction of the MAs. All Stock Indices trades taken should be in this trend direction.
We then use the 15 minute chart to find optimal point to enter trade transactions. Stock Indices 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 Indices trades are not opened.
Buy Signal - Stock Index Uptrend/Bullish Market
To generate buy (bullish signals) using 20 pips MA strategy, we shall use the 1hour & 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 time frame to generate a Stock Indices trade signal.
On 15 minute chart time frame, when the 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 & 200 Simple Moving Average Buy Signal - MA Moving Average Stock Indices Strategy
Sell Signal - Stock 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 time frame.
On the 1 hour chart time frame, price should be below both the 100 & 200 SMA. We then move to the 15 minute chart time frame to generate a Stock Indices 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 & 200 Simple Moving Average Stock Indices Sell Signal - MA Moving Average Stock Indices Strategy
With this strategy method price will generally bounce of these support & resistance levels because many Stock Indices traders watch these zones, & open similar trades at around the same point.
These support & resistance levels act as short term resistance or support levels within the price charts.
Profit Taking level For This Strategy
With this strategy the price will bounce and make a move in the direction of the original trend. This move will range from 60 - 70 pips.
The best Stock Index profit taking level would therefore be considered to be 60 to 70 pips from the 200 SMA.
