Forex 20 Pips Moving Average Strategy Explained
20 Pips Moving Average Strategies - 20 Pips Trading Systems Trading Strategies
The 20 pips price range moving average strategy is used with the 1 Hour chart and 15 minute chart. On this timeframes we use the 100 and 200 simple MA Moving Average.
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 timeframe checks the long-term direction of the trend, upward trend or downwards trend, depending on the direction of the MAs. 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 MA 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 timeframe to generate a signal.
On 15 minute chart time frame, when the price reaches the 20 pips range above the 200 SMA, we open a buy trade & place a stoploss order 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 order.
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 MA Trading Buy Signal - 20 Pips Moving Average Strategy
Sell Trading Signal - Downtrend/Bearish Market
To generate sell signal (short signals) using the 20 pips MA 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 & 200 SMA. We then move to the 15 minute chart timeframe 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 stoploss order 30 pips above the 200 simple moving average.
100 and 200 Simple MA 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 zones, and open similar trades at around the same point.
These support & resistance zones act as shortterm resistance or support zones within the market price charts.
profit taking zone for This Strategy
With this trading strategy the market 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 henceforth be considered to be 60 to 70 pips from the 200 SMA.
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