Long-Term Stock Indices Trading Strategy
Long term Indices strategy will use long period such as the 100 & 200 MAs which act as long term support and resistance levels. Since many Stock Indices Traders use these 100 & 200 moving averages, price will often react to these support and resistance levels.
100 & 200 MAs - Trade Strategy Examples
In Stock Indices, traders can use both fundamental analysis & technical analysis to help determine whether a Indices price trend is a good buy or sell.
In Indices technical analysis technique traders looking to gauge supply & demand for a Indices price chart use the 200 day moving average to examine data in different ways.
Stock Indices traders are most familiar with the basic Indices technical analysis of the 200 day MA is used to plot the long term support or resistance level. If market price is above 200 day MA then the trend is bullish, & if it's below then it is bearish.
One of the ways to measure supply & demand in Indices trading is to calculate the average closing price over the last 200 trading sessions. This accounts for each day going back in time & shows how this 200 day average has moved.
The reason why the average 200 day MA in particular is so popular in technical analysis is because historically has been used with profitable results for trading in the exchange market. A popular timing strategy is used to buy when the market is above its moving average of 200 days & sell when it goes below it.
With this moving average indicator, Indices traders can benefit from being notified when a Indices price rises above, or falls below its 200 day MA Moving Average & then use fundamental analysis to help determine if the trading signal is an opportunity to go long or short.
