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Using the 100 days SMA to create a simple strategy

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The complex trading system always looks fancy. The rookies in Singapore easily get attracted to the chart that has complex drawings. Evaluate the position of the candles and the drawings of the complex system carefully. A skilled trader can easily point out the unnecessary variables with a great level of ease. It doesn’t take years of experience to differentiate between an effective and complex trading method. This article will site a unique example of how a simple system can make you a great trader. We will teach you the use of 100 days SMA so that you can trade the options market without having any difficulties. Let’s see the process of creating a perfect options trading strategy with 100 periods SMA.

100-day simple moving average

The 100-day simple moving average calculates the last 100 bar of the candle and finds the arithmetic mean. The arithmetic means result in a dynamic moving average the acts as strong support and resistance. When the price is trading above the 100-day moving average, the trend is up. On the contrary, when the price is trading below the 100 days SMA, consider the market is in the downtrend. Based on the existing trend, you should be taking the trades. The reason we prefer 100 periods moving average, is the reliability. Analyze the support and resistance of this SMA, you will find many great signals. However, if the time frame is minute 1, never expect to get better results.

Selection of the time frame

Many investors ignore the high-performance trading platform. You need to use it, especially when you use the 100 periods SMA. Traders who have yet to see how a professional platform looks like, see it here. With the help of the professional platform, you should be able to get very accurate information. There is will be no fault in the pricing of the instrument. But still, you should be using the hourly or the daily chart to trade the market. In case you get involved with the minute chart, you won’t get the overall picture of the trend. Since the strategy will provide you trend trading technique, it is important that you select the trend from the higher time frame. Ignore the lower time frame signal since the quality is not that great. Boost your patience level and learn to analyze the hourly chart.

Execution of the trade

When the market is in an uptrend, you can set the pending buy order right at the 100 SMA. On the contrary, set the sell limit at the 100 period SMA when the trend is down. The execution process might seem very simple but most of the time market respects this level for the first time. Since the analytical time frame will be hourly, you can expect to win more than 20 pips from the trade setups. Regarding the stop loss, 10 pip stops are enough for such trade. People often suffer from a lack of confidence while using this technique. They should test this strategy in the demo platform since it is a great way to develop the skills.

Study the price action signals

Including the price action trading strategy with this method is a great way to improve your skill. People who consider options trading as their fulltime profession has a lot to learn from this business. If you consider trading is a very hard task, you should think twice before taking steps in this world. You have to keep faith in your performance and learn things. Go through the basic price action pattern and this should give you the confidence to take trades in the real market. As you become a confident trader, you will feel more comfortable with this business. But remember, every strategy generates some losing trades. So, stick to the 1% rule of money management while using this strategy.

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