20 Pips Price Range MA Trading Strategy
The 20-pip moving average strategy works best with 1-hour or 15-minute charts. This strategy employs 100 and 200 simple moving averages as technical indicators for analysis.
On both timeframes, apply 100 and 200 SMA indicators. They reveal the market trend direction.
The 1-hour chart timeframe is useful for analyzing the market's overall direction - upward or downward. Trade decisions involving indices should align with the market trend as indicated by the Moving Averages (MAs).
Switch to the 15-minute chart for entry points. Open index trades only if price stays within 20 pips of the 200-period simple moving average. Skip if outside that range.
Buy Signal - Stock Index Uptrend/Bullish Market
To derive buy signals (bullish indications) using the 20 pips MA strategy, the analysis will focus on both the 1-hour and 15-minute chart timeframes.
On the 1-hour chart, the price must be above both the 100 and 200 simple moving averages. After confirming this, switch to a lower timeframe, such as the 15-minute chart, to generate a trading signal for the index.
On 15 minute chart time-frame, when the price reaches 20 pips range above 200 SMA, we execute 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 tolerance but to avoid your trades being stopped-out by normal Stock Index volatility its best to use 30 pips stop loss.
A buy trade can also be opened when 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 time frame.
On a 1H chart timeframe, the price should be below both the 100 and 200 SMA. The next step is to move to the 15-minute chart timeframe to generate an index signal.
On a 15 minute chart, if the price goes 20 pips below the 200 SMA, we start a sell trade and set a stop loss 30 pips above the 200 simple moving average.
Selling Indication Based on 100 & 200 Simple Moving Average(MA) Index Index Trading Strategy Using Moving Averages
With this specific strategy approach, price action is frequently observed to react off these support and resistance zones because a substantial number of Index traders focus their attention on these areas and initiate similar trade entries around these price points.
These support and resistance levels act as short-term resistance/support levels within price charts.
Profit Taking level For This Strategy
In this plan, price bounces back and follows the main trend. Expect 60 to 70 pips of movement.
Aim for 60 to 70 pips from the 200 SMA as the best profit target for stock indexes.
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