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Trading Strategies with 200 Simple Moving Average

Mar 15, 2025

Lecture on Trading and the Use of 200 Simple Moving Average (SMA)

Introduction

  • Speaker recounts making $3,852 in one day of trading.
  • Initial risk was about $3,000 to $4,000.
  • Strategy involved risking initial gains to make more.

200 Simple Moving Average (SMA)

  • Definition: The 200 SMA is an average of the past 200 candlesticks on whatever timeframe you are using (e.g., 2-minute, 5-minute, hourly, daily).
  • Significance: Acts as a resistance or support line.
    • Support: Price moving down can bounce off the SMA.
    • Resistance: Price moving up can be resisted by the SMA.

Setting Up the 200 SMA

  • Go to the indicators section, search for "moving average".
  • Choose "moving average simple" and set it to 200.
  • Customize the appearance (e.g., color and line style).

Trading Strategy Using SMA

  • The speaker uses different charts at different times:
    • 2-Minute Chart: Used from market open until 10 AM Eastern.
    • 5-Minute Chart: Used from 10 AM to 11 AM Eastern.
    • 10-Minute Chart: Used after 11 AM Eastern.
  • Traders should not rely solely on one indicator; multiple time frames and confirmations are used.

Trade Examples

First Trade

  • Market Open: Prices rejected off the 200 SMA.
  • Waited for confirmation and pullback before entering.
  • Used hourly levels for additional guidance.

SPY & SPX Trading

  • Emphasized the relation between SPY and SPX.
  • Used the 200 SMA on SPX as a profit-taking guide.

Amazon Trade

  • Traded during all-time high conditions, where there are no known resistance points.
  • Used whole dollar targets for profit-taking.

Trading Philosophy

  • Simple Trading: Favors simplicity over complexity.
  • Patience: Important to wait for the right setups.
  • Trades are based on structure and simple systems.

FAQs and Advice

  • Option Contracts: Prefers at-the-money contracts.
    • At-the-money means choosing options where the price is closest to the current market price.
  • Key Takeaways:
    • Importance of the 200 SMA.
    • Keeping strategies simple for effective trading.

Mentorship and Resources

  • Mentions offering mentorship and having additional resources through YouTube.
  • Encourages keeping a simple approach and offers to help those who want to learn more.

This lecture highlights the importance of using technical indicators like the 200 SMA in trading, emphasizes simplicity in strategy, and provides examples of successful trades. The speaker also stresses the importance of patience and structured approaches to trading.

Full transcript