how to trade with 200 Day moving average

                                                                200 DAY MOVING AVERAGE

Moving average is trend analysis technical tools. Technical analyst used multiple time frame moving averages. although, moving averages would show trend continuation or trend changes. 200 day moving average is long term moving averages which is largely used by investors and swing traders. normally, it act as strong resistance and support. 

if broader market or individual stock price trading below 200 DMA, which considered as bearish trend as well as, the broader market or individual stock trading above 200 DMA long term investor would take long position because 200 DMA make distinction between bull trend and bear trend.  suppose, the broader market trade near the 200 DMA, market participants are closely watching of its price action. The main reason is 200 DMA will change market direction either side, because the bullers keep stop loss underneath  of 200 DMA to their long position . like wise, bearers maintaining their stop loss above the 200 DMA.

                                                                SUPPORT AND RESISTANCE

in the Technical chart support & resistance will determine further movement of particular stock. normally, Technical analyst sort out support & resistance as two types, such as major support & resistance and minor support & resistance. major support & resistance will make strong reaction on price action. but, minor support & resistance would not solid reaction rather than major S&R. 

This is the case, need more clarification about major and minor support & resistance, simply put, in the bull market minor support works well like major support, however, minor supports would not bear the price when drop down price as fast as, if any one bad news is being around the stock market. 

on the flip side, in the bear market minor resistance  will react immediately but minor supports not hold the price likely to bull market. now, you would be understand minor supports would not work sharply in bera market or shrp correction of the stock market as well as minor resistance would not work in strong Bull market or when surprise news is being around the stock market.

                                                                SWING TRADING

The traders are applying lot of trading strategy in stock market. however, each trader use unique method in trading carrier. swing trading  is one of the profitable trading strategy. usually, swing traders make short position near the resistance and take long position near the support. this is simple definition of swing trading, according to swing trading, novice swing traders are able to get success even apply their strategy perfectly. because trading decision has to be made under the market condition.  

As i pointed out earlier, should not make short position on minor resistance while being occur  strong rally. the same strategy should be applied in bera market, do not make long position near the support when market is in sharp fall.

200 DMA act as strong support & resistance and also it leads to deciding factor of upcoming direction of market or individual stock. in the sluggish market or low volatility market, swing trading strategy probably work well rather than strong trending market. so, whenever you see, 200 DMA , do not rush to enter the trade. just examine, the market condition and sector strength.

in terms of the 200 DMA, it will give better trading opportunity than other trading method, if stock goes below the 200 DMA that is really potential opportunity to make short position but need insight view of sector, perhaps, stock of that industry if  do under perform in the stock market. your short position could give potential profit. beside, your trading might be low. 

suppose, if anyone stock cross above the 200 DMA.  intensively examine before you take long position. current sector and technical view of the broader market. unless, you might get negative result . if sector is doing out performing or sector indices when being strong position, which long position probably will give high profit. 

                                                    MOVING AVERAGE CROSS OVER

This is also known as Golden cross over. the short-term moving average cross above or cross below the long-term moving average which is called as Golden cross over. before you take trading decision in basis of 200 DMA. short- term moving averages that, is it favor to your expected direction. for example, A stock when move beyond the 200 DMA . just check out 7 DMA is trading above 20 DMA make sure, if this cross over happened earlier, probably, your success ratio will be high.