MA System Explained
Stock Indices 20 Pips Moving Average Strategies
The 20 pips stock price range moving average strategy is used with the 1 Hour stock chart and 15 minute stock chart. On this chart timeframes we use the 100 and 200 simple moving average 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 trend.
The 1 Hour chart time frame checks the longterm direction of the trend, upward or downward trend, based on the direction of the moving averages. All stock trades taken should be in this trend direction.
We then use the 15 min chart to find the optimal point to enter stock trades. trades are opened only when the stock price is within 20 pips range of the 200 simple MA, if stock price is not within this pip range stock trades are not opened.
Uptrend/Bullish Market
To generate buy (bullish signals) using the 20 pips moving average strategy, we shall use the 1hour and 15 minute chart time frame.
On the 1 hour chart time frame the stock price of the stock chart should be above both the 100 and 200 simple moving average. We then move to a lower chart time frame, the 15 min chart time frame to generate a signal.
On 15 min time frame, 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 stock 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 - Moving Average Strategy
Downtrend/Bearish Market
To generate sell (short signals) using the 20 pips moving average strategy, we shall also use the 1 hour chart timeframe and 15 minute chart time frame.
On the 1 hour chart time frame, the stock price should be below both the 100 and 200 SMA. We then move to the 15 min chart time frame to generate a Signal.
On 15 minute stock chart, when price reaches the 20 pips range below the 200 SMA, we open a sell indices trade and place a stop loss 30 pips above the 200 simple moving average.
100 & 200 Simple Moving Average Sell Trading Signal - Moving Average Strategy
With this strategy method price will generally bounce of these support and resistance levels because many traders watch these areas, and open similar stock trades at around the same point.
These support and resistance levels act as short term resistance or support levels within the stock price charts.
Profit Taking level for This Strategy
With this strategy the stock price will bounce and make a move in direction of the original trend. This move will range from 60 - 70 pips.
The best profit taking level would therefore be considered to be 60 to 70 pips from the 200 SMA.
