Simple 200-day moving average touch options trading strategy is considered to be the master piece trading strategy in the world of binary options trading. There are many professional traders in the world who are making consistent money years after simply by following this trading strategy. The 200 day SMA provides dynamic support and resistance level to the traders and the trained professional trades this level with the great level of accuracy. But in order to trade the market with 200 day SMA touch options trading strategy, you must understand the market sentiment. This is such a thing which you will develop over the course of time. No need to worry. We will tell you how to trade no touch option like the pros!
Let’s see how the professional traders use the 200 SMA touch options trading strategy
In the above figure, traders use the 200 day SMA as dynamic support and resistance level. Price has the tendency to touch these levels when it come closers. Professional options traders executed their touch option order when the price gap became less than 12 pips between the 200 days SMA. But in the Red shaded region, the price was close enough but not closes enough for the expert to enter into their touch option trade. The price gap was more than 20 pips with the 200 days SMA. It’s imperative that traders follow the fixed 12 pip trade triggering distance while trading this strategy since market often tends to reverse its direction near the dynamic support and resistance level. But if the gap is only 12 pips then the market will definitely retest the dynamic level at least once.
Some expert traders follow 30 pips as trade triggering parameters for extreme volatile pairs. But before you master the 12 pip gap technique you should be using the 30 pip gap as your trading strategy. But you can definitely use the 30 pip gap as default parameters in the event of major economic new releases since market often gives false spike only to test the dynamic support and resistance level of the financial instrument. Though the system is profitable and easy to execute, only7% of the traders are making money out of this strategy. The reason behind the pathetic performance of the traders remains within their greed. They lose the proper grip of money management by getting too many winners using this touch options trading strategy. Ultimately they start to take the huge risk and lose all their hard earned money by single losing trade. As option traders, you must remember that losing is also a part of the trader’s career. You must manage your trade efficiently with proper money management factors.