200 Day Moving Average

Here are the 200 period moving average rules: Follow these rules and you will reduce the chances of losing money, or getting into unprofitable.

RULE #1

1. The 200 period moving average acts as an uptrend resistance level. In fact 80-90% of the time, if stocks are rallying towards the 200 period moving average, they will stop dead in their tracks when the reach the 200 period moving average.

a. Either the stock will hover, base and trade slide ways when it reaches the 200 period moving average area

b. Or the stock will immediately take a sharp turn in the opposite direction, as there will always be heavy resistance in the stock when it reaches the 200 day moving average.

RULE #2

The 200 periodmoving average always acts as a major support in down trends. If you were trading a stock and it was on a heavy short trend, once you notice the stock approaching the 200 day moving average area, your best bet would be to start lightening up your share size and taking your profits

a. What happens 80-90% of the time is that the stock will either pierce through the 200 MA and immediately make a sharp, and sometimes violent move in the opposite direction of your short trade.

b. Or the trade will simply halt, dead in its tracks when it reaches the 200 period moving average.

RULE #3

The 200 moving average is a massive up trend or down trend starter.

a. When stocks begin their moves from the 200 moving average, especially after some consolidation time at the 200 period moving average, keep in mind that the move that will come as a result of the 200 MA will usually be very powerful.

Because professional traders all over the world know the power of the 200 day MA it has become a psychological level that traders make a majority of their decisions from.

b. One of the best lessons a beginner stock market trader can take from stock market for beginner school is, that initiating trades from the 200 period moving average, can lead to one of the most lucrative trades.

c. It doesn’t matter whether the trade is a long or a short, it doesn’t matter how long you are planning on holding the trade, if the trade is taken from the 200 day moving average you have a better chance of hitting the home run, than if you initiate your trade from any other stock market technical indicator.

• Understanding the 20 day moving average
• Stock Market for Beginners: understanding the 50 day moving average
• Understanding the Psychology of the 200 Day Moving Average