Moving Average Crossover

Description

Moving average crossovers are one of the main moving average strategies. In this strategy, two moving averages are applied to a chart: one longer and one shorter.

Exponential moving averages react quicker to price changes than simple moving averages. In some cases, this may be good, and in others, it may cause false signals. Moving averages with a shorter lookback period (20 candles, for example) will also respond quicker to price changes than an average with a longer lookback period (e.g. 30 candles).

Trading Strategy

A buy signal is produced when the shorter-term MA crosses above the longer-term MA. A sell signal is produced when the shorter-term MA crosses below the longer-term MA.