The 100 most popular stocks listed on the London Stock Exchange form the FTSE 100 stock market benchmark index. Long-term traders tend to be much more interested in investing in the FTSE 100 market due to its high reliability and stability. Most professional long-term investors try to pick the bottom and top of the price reversal of the FTSE 100 market so that maximum profits can be realized with relatively little risk. Newer investors that are looking to limit risk should consider opening positions with an easyMarkets trading account, so that the methods of professional traders can be learned and implemented in the future.
Before a market major reversal, important patterns are formed by the market which helps in the change of trend. Professional traders often use the Coppock curve and important patterns to ride the newly formed trend in the market. This type of trading strategy is known as Coppock Curve trading strategy for FTSE 100. Let’s see how the professional trade the FTSE 100 from the beginning of new trend:
Figure: Trading the FTSE 100 with Coppock Curve trading strategy
In the above figure, the formed a descending channel after a long bearish movement in the daily chart. Professional stock traders draw the bearish channel with three connecting points on the channel resistance and three connecting points at the channel top. It’s imperative that the descending channel forms at least minimum of 7-points in the channel support and resistance level. After all the 7 point is printed on the chart, traders look for a bullish breakout in the opposite direction of the trend.
After the market successfully breaches the channel top, trader’s looks at the reading of the Coppock indicator. If the indicator value is greater than 100, it confirms the bullish breakout of the channel. Since this strategy is trend reversal trading strategy trader uses the price action confirmation signal before taking their trade. For instance, in the above figure after the bullish breakout of the pattern profession, long-term investor entered the market with bullish candlestick pattern. Traders use tight stop loss while trading this strategy and ride the new bullish trend of FTSE 100 from the very beginning.