Forex 20 Pips Moving Average Trading Strategy Explained

20 Pips Moving Average Strategies - 20 Pips Trading Systems Strategies

The 20 pips price range moving average strategy is used with the 1 Hour chart and 15 minute chart. On this chart time frames we use the 100 and 200 simple moving average indicator.

Both the 1 Hour and 15 minute chart time frames will use the 100 and 200 SMA (SMA Indicator) to determine the direction of the trend.

The 1 Hour chart time-frame checks the long-term direction of the trend, upwards trend or downwards trend, depending on the direction of the moving averages. All trades taken should be in this trend direction.

We then use the 15 min chart to find the optimal point to enter trades. trades are opened only when the price is within 20 pips range of the 200 simple MA, if price is not within this 20 pip range trades are not opened.

Uptrend/Bullish Market

To generate buy signal (bullish signals) using the 20 pips moving average strategy, we shall use the 1 hour and 15 minute chart time-frame.

On the 1 hour chart time-frame the price of the chart should be above both the 100 and 200 simple moving average. We then move to a lower chart time frame, the 15 minute chart time frame to generate a trade signal.

On 15 minute chart 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 Forex 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 and 200 Simple Moving Average Trading Buy Signal - 20 Pips Moving Average Strategy

Sell Signal - Downtrend/Bearish Market

To generate sell signal (short signals) using the 20 pips moving average strategy, we shall also use the 1 hour chart time frame and 15 minute chart time-frame.

On the 1 hour chart time frame, the price should be below both the 100 and 200 SMA. We then move to the 15 minute chart time frame to generate a Signal.

On 15 min 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 and 200 Simple Moving Average Trading Sell Signal - 20 Pips Moving Average Strategy

With this strategy method price will generally bounce of these support and resistance levels because many traders watch these levels, and open similar trades at around the same point.

These support and 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 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.