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Trading the S&P 500 200-Day Moving Averages

January 26, 2021 by Daniels Trading| Tips & Strategies

The moving average is one of the most popular technical indicators among futures traders. Moving averages come in many forms, including exponential, smoothed, and simple. For anyone interested in becoming better acquainted with these powerful tools, focusing on the 20-, 50-, 100-, and 200-day period simple moving averages is a great place to begin.

In this blog post, we’ll explore the ins and outs of moving average trading using the ever-popular E-mini S&P 500 futures contract for illustrative purposes.

What Is a Moving Average?

A moving average is a technical tool that calculates the average of a select range of pricing data points. It is represented visually as a single line that’s plotted as an overlay to an existing price chart.

The simple moving average (SMA) is the most elementary of these indicators because no fancy mathematics are applied to enhance timeliness or accuracy. In reality, simple S&P 500 200-day moving averages are just that: the average values of a 200-day period sample of pricing values. The derivation for this indicator is as follows:

  • Pn= Contract price at period n
  • N = Number of total periods
  • Simple moving average (SMA) = (P1 + P2 + … +Pn) ÷ N

Learn how our powerful software can empower your trades.

Although the arithmetic behind the SMA is relatively basic, it is cumbersome. Fortunately, modern software trading platforms calculate moving averages automatically. All a trader must do is select the desired contract, period, periodic price point (high, low, mid, median), and moving average type, and then the physical computations are automated. For example, to derive E-mini S&P 500 200-day moving averages, enter the following information into your platform:

Input Value
Contract E-mini S&P 500
Period 200
Price Point High, Low, Mid, or Median
MA Type Simple, Exponential, Smoothed, or Weighted

Perhaps the most significant advantage of using moving averages is flexibility. The indicator can be configured to include nearly any periodicity and price point of all futures products. Accordingly, you can apply moving averages to your favorite contracts, from the equities indices to ag products.

Moving Averages: Form and Functionality

Moving averages come in a multitude of varieties based on how each is calculated. However, no matter the type, moving averages are normally interpreted in several specific ways. Here are the key bits of information conveyed by a moving average:

  • Trend confirmation or denial
  • Identification of potential market reversal points
  • Support and resistance levels for market entry or exit
  • Recognition of popular chart patterns such as the golden cross or death cross

Although moving averages are very similar, they represent different data sets. For instance, the information disseminated by E-mini S&P 500 50-day period SMAs differs from that of E-mini S&P 500 200-day moving averages. Generally, the periodicity of each renders a unique interpretation of data:

  • Shorter periods: Shorter-period moving averages have a faster response time, giving a better representation of current price action. These tools are ideal for intraday and day trading strategies.
  • Longer periods: Longer-period moving averages have a slower response time, providing a superior evaluation of macro price action. These tools are great for long-term trend-following or market-reversal trading and investment strategies.

To get the most out of any moving average, it is essential to align your periodicity to your trading strategy. If you’re a swing trader or longer-term investor, then 50-, 100-, or 200-day moving averages will carry more relevance than 50-, 100-, or 200-minute moving averages. Ultimately, it’s your responsibility to find which indicators work best for your trading strategy.

Interested in Learning How to Trade E-mini S&P 500 200-Day Moving Averages?

If you want to learn how to trade indicators such as E-mini S&P 500 200-day moving averages, a great place to begin is with a free 14-day trial of dt Pro. Featuring a collection of advanced technicals and order-entry functions, dt Pro is a robust, all-in-one trading platform. Get started trading moving averages, multibracket orders, and much more in real time with dt Pro today.

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Filed Under: Tips & Strategies

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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