The ONLY 2 indicators I use to make $2,134/Day Trading

Summary

This video reveals a simple yet powerful trading strategy using only two indicators: the 20-period and 200-period moving averages. Focusing on trend-following, the 20 MA helps identify entry points during retracements, while the 200 MA acts as long-term support or resistance. The creator emphasizes simplicity over complex indicators, multi-timeframe analysis for precise setups, and trading with the trend rather than attempting to pick tops or bottoms. Real examples from stocks, ETFs, and crypto illustrate how these moving averages guide entries, exits, and trend recognition. The approach is designed to make trading straightforward, effective, and accessible for all levels of traders.

Takeaways

• 😀 Simplicity is key: The strategy focuses on using only two moving averages, the 20 MA and the 200 MA, to make trading decisions.
• 😀 20 MA acts as a short-term trend indicator: A rising 20 MA suggests an uptrend, while a falling 20 MA indicates a downtrend.
• 😀 200 MA is used to identify long-term trend direction and key support/resistance levels.
• 😀 Combining timeframes is essential: Use the 200 MA on daily charts for long-term trend analysis and the 20 MA on intraday charts for precise entries.
• 😀 The 20 MA can act as a dynamic support/resistance level for price retracements. When price retraces to the 20 MA in an uptrend, it presents a buying opportunity, and vice versa for a downtrend.
• 😀 Avoid trading when the 20 MA is flat or price is too far away from it, as this indicates a lack of clear direction or momentum.
• 😀 Look for price rejections from the 20 MA to confirm trend continuation or reversal setups.
• 😀 The 200 MA is a critical long-term reference, acting as resistance during downtrends and support during uptrends.
• 😀 Multi-timeframe analysis allows for better entries: Look for alignment between the 20 MA on intraday charts and the 200 MA on daily charts for higher probability trades.
• 😀 Real-world examples (like Coinbase, S&P 500, Ethereum) demonstrate how the 20 and 200 MA can be applied to different assets across various market conditions, making the strategy versatile and reliable.

Q & A

What are the only two indicators used by the trader in the video?

The trader exclusively uses two simple moving averages: the 20-period moving average (20 MA) and the 200-period moving average (200 MA).

Why does the trader emphasize using only two moving averages instead of multiple indicators?

The trader emphasizes simplicity because multiple indicators can create confusion and analysis paralysis, where conflicting signals prevent clear trading decisions. Using two moving averages keeps the chart simple and enhances the ability to read price action.

How does the 20-period moving average (20 MA) help in trading?

The 20 MA acts as a trend-following tool, showing whether the price is in an uptrend or downtrend. It can be used to identify potential entry points when prices retrace and touch the moving average in the direction of the trend.

What does a flat 20 MA indicate?

A flat 20 MA indicates a lack of momentum and suggests that prices are moving sideways, making it less effective for trend-following strategies.

How is the 200-period moving average (200 MA) used differently from the 20 MA?

The 200 MA is primarily used as long-term support or resistance. Prices above it treat it as a floor (support), while prices below it treat it as a ceiling (resistance). A flat 200 MA can also participate in rare 'squeeze' setups with the 20 MA.

What is a 'squeeze play' as explained in the video?

A squeeze play occurs when the 200 MA is flat and the 20 MA is trending and passing through it. Prices oscillate between the 200 (resistance) and 20 (support) until a breakout occurs. These setups are rare but can be very powerful, often used in swing trading.

Why does the trader prefer trading in the direction of the trend rather than picking reversals?

Trading in the direction of the trend is easier and more reliable than predicting tops or bottoms. Using the 20 MA allows traders to enter established uptrends or downtrends at strategic retracement points, reducing risk.

How can the distance between price and the 20 MA be interpreted?

The distance between price and the 20 MA measures 'extension.' A large distance indicates that the price is extended from the mean, suggesting caution for entering a trade or an opportunity for a mean reversion setup.

How are intraday and daily time frames used together with the 20 and 200 MAs?

The 200 MA is often analyzed on daily or weekly time frames to identify overall support/resistance, while the 20 MA is used on smaller intraday time frames like 2-minute, 5-minute, or 15-minute charts to find precise entry points within the established trend.

Can the 20 and 200 MAs be applied to different assets besides stocks?

Yes. The trader demonstrates that these moving averages work for ETFs like SPY and cryptocurrencies like Ethereum, showing that the principles of trend-following and support/resistance can be applied across various markets.

Why does the trader not consider volume as an indicator?

The trader uses volume as supplementary information rather than a core indicator. Volume helps confirm trends and moves, but the primary trading decisions are based on the 20 and 200 MAs.

What should traders avoid when using indicators according to the video?

Traders should avoid overloading charts with multiple indicators, relying solely on indicators for decisions, and trading in the absence of a clear trend. Indicators should complement, not drive, trading decisions.