Alphavo

Knowledge base / Trend following

03 / 50

Trend following

What is a dual moving-average crossover actually deciding?

Dual moving-average crossover

What it bets

When the short average stands above the long average, recent prices have been stronger than the longer stretch.

How the rule is written

Two averages of different lengths. The short one crossing above the long one is a long. Crossing below is a short or an exit. People often cite 50 and 200. That is one way to write it, not the definition of this method.

When it fails

When price goes sideways, the two lines cross again and again. Each cross looks like a new trend, and then they cross back.

Do not confuse it with

A triple average asks whether three lines are lined up, not whether one cross happened. GMMA watches two groups of averages open and compress. MACD watches the difference of two averages, and how fast that difference itself is moving.

More in this family