Author Topic: How to use the 100 days moving average just like the pro trader  (Read 147 times)

Offline shanewrights

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Indicators are one of the most used trading tools in the financial market. Most of the novice traders tend to trade the market with the indicator. Some of them even use too many indicators since they think that by taking more readings they will be able to execute quality trades. But have you ever looked at the professional Aussie traders trading style? All of them are trading the market with one or two indicators and none of them are considering indicator as for their prime trading tools. They simply consider it as a trade filter tools. Though there are many types of indicators 100-day moving average tends to be the most used indicators in the world. Starting from the novice traders ending with the expert, all of them are a huge fan of it. Today we will learn how to use the 100-day moving average just like professional traders in the financial world.

What is 100 Day moving average?
This is nothing but a simple indicator which shows the average of the past 100-day price movement in the form of moving line. The professional traders often use it to find the dynamic support and resistance level on the market. Most of the time the market tends to respect the 10o day moving average. This means if the price hits the 100 SMA from below then it will go down again as the 100 days SMA will act as a resistance line. Similarly, if the price hit 100 days SMA from above then it will bounce off since the SMA provides dynamic support level. But these are not absolute rules as the market will often breach this SMA.

How do we use the 100 days SMA?
The 100 day SMA is mostly used by the professional scalpers or in options trading world. The expert set pending sell orders right at the 100 days SMA if the price trades below the moving average. They generally use 10 Ė 15 pips stop loss and aim for 20+ pips rewards for each trade. Some experts even use the trailing stop loss features to maximize their potential profit. If you can truly master this skill then you can even aim for more than 100 pips profit from a single trade when you will be risking only 20 pips. Though the system is extremely profitable you should never risk more than 3 percent in single trade. No one is sure that you will win a certain trade. So always use proper money management plan to save your trading capital.

Price action signal
This is when getting a little bit tricky. But donít worry! We will make it crystal clear to you. Price action trading is nothing but the study of the candlestick pattern. The professional traders use the price action confirmation signal to trade the key support and resistance level with the extreme level of precision. Since the 100 days, SMA acts as a dynamic support or resistance level the expert price action traders wait patiently for the formation of reliable candlestick pattern right at the dynamic level. Once the signal is formed they execute their trade and set their take profit level to nearest key support or resistance level. Using the 100 day SMA along with price action confirmation signal is extremely profitable but you need to practice it first to execute it in the real market. Once you feel comfortable in demo account then switch back to your real account and wait for the perfect trade setup near the 100 days SMA to execute your order.

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