200 SMA Strategy

Hello,

Big time players use the 200 SMA to catch a change in the tendency.

I think this is a great tool to get some serious risk reward trading. I have seen 1:7 on the daily chart for EURUSD.

has someone used it?

Are you using any strategy?

I have used 200 as a supporting feature for my long-term trend-following but I have dropped it now as the periods is SO long that it just doesn’t relate well to my strategy, I usually hold winners for 15 days if all goes well, which is much shorter than the 200. I fact I usually reckon a rule of thumb is that it takes half the period for the MA even change slope - to go from sloping upwards to sloping downwards or vice versa - that’s 100 days, too far out to be useful for me. I find the 50 much more helpful, while the 20 usually is an early warning signal of what’s maybe coming.

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Can you share any details on who these big players are and anything about the strategy?

Hello Dudebro,

Many use them, take for example part of the interview that Tony robbins did to Paul Tudor Jones.

TR: So my next question is, how do you determine the trend?

PFJ: My metric for everything I look at is the 200-day moving average of closing prices. I’ve seen too many things go to zero, stocks and commodities. The whole trick in investing is: “How do I keep from losing everything?” If you use the 200-day moving average rule, then you get out. You play defense, and you get out.

—–

TR: That is considered one of the top three trades of all time, in all history (1987 Crash)! Did your theory about the 200-day moving average alert you to that one?

PTJ: You got it. It had done under the 200-day moving target. At the very top of the crash, I was flat.

I noticed that if use it without any other SMA it can be very powerful.

Yes to an extent its a useful indicator but on any randomly selected chart, price can be moving in the opposite direction while on the wrong side of the 200 for long periods and huge pip totals, so it can be seriously misleading for a long time. e.g. USD/JPY, March-May this year, Dow, January-July this year.

If the 200 period relates to your entry/exit decisions and holding periods, fine, it should be useful. But too long for my strategy. Any indicator has to be vital to trade decisions and also tell you something you absolutely must know which nothing else on the chart already tells you.

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There is no strategy that is 100% accurate and who ever says that is clearly lying.

I noticed that the 200 SMA strategy, where we buy if the price over the line or sell if the line is under the line, works great on EURUSD on 1H chart and the daily chart.

Sounds overly simplistic. I mean, sure that would work just about as many times as it wouldn’t. I’m looking at EURUSD right now, over the last 200 days. Half the price is above the 200, the other half is below.

Indeed it is.

I can throw in that to take a trend-following trade, let’s say an uptrend, I firstly must see the 20EMA above the 50, and both sloping upwards. Most traders actually tell me that’s way too slow (though I believe they’re mistaken of course).

I look back as far as 3mths to see what price has been doing but going further back doesn’t improve my win ratio.

I am only ever reading about using SMA 200, this indicator usually used to analyze long trend market, what tendencies the movement price for a long time period, because SMA 200 will take data backward history from 200 candlesticks, if indicator shows bearish line hence as trader will look option to sell on these pairs, and if indicator shows bullish line hence as trader will look for option buy on these pairs

What is this questions?

Correct and this indicator is using by financial institutions as banks!

That is where you go bearish or bullish.

on the daily chart you can use a great RRR.

please send me picture of The indicator please

Financial institution usually they have huge amount capital, if they use SMA 200 to analyze the long-term trend, still reasonable because they have strong margin, but to look for a short-term trend, I think SMA 200 less effective, we need another indicator

You could stack the 50-100-200 SNA;s and get a real good picture, when placed on multiple time frames you get the moving slope for momentum. I’v done this. Works well and signals trend continuation, pending reversals and both regular and hidden divergence, However I am also lazy and adhere to the KISS principle and simply use a Double Bollinger Band.

This provides the direction. The location of the Price point between the deviation signal lines provides the location. And with the addition of the CCI an open ended oscillator I now have the momentum.

Keeping track of news events, what else would a trader need?

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Yes, I also use 200 SMA on my daily chart; but I don’t rely on this tool that much! It’s just a parameter to me!

Are you using the double bollinger band strategy by Kathy lien?

You can use it in the 1H Chart.

Yes I use the Double Bollinger Bands every day on all time frames.
that provides both direction and price action location.
I use CCI as a momentum gauge.
My CCI is set to both plus and minus signal lines. for the percentage of deviation from the mean,

I have read all of the Kathy Lien material.

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