Moving Average Crossover
Moving average crossover has been used to avoid whipsaw or eliminate noises. One of the popular ones for equity is SMA 50 days and SMA 200 days crossover. This is usually called 'golden cross' when the SMA 50 days crosses over above the SMA 200 days. The inverse is called 'death cross'. See recent Barrons article for an interesting description.
The following is a list of other possible applications of Moving Averages (MAs).
- MACD Strategy: Another noise reduction strategy.
- Moving Averages Strategy for Equity: The standard MA strategy for various stock market indices or securities.
- Moving Average Short: Use Moving Average as a downside protection by shorting another security similar or related to the underlying security. Another similar strategy is the Momentum Hedge, which utilizes MAs are the downside protection for a momentum based portfolio,
- Moving Average With Signal: Use MAs from another security as the trading signal for the underlying security.
- Moving Average With Two Signals: Instead of merely using one signal, use multiple signals (two signals) to make sure the trends are confirmed.
See Also
- Micahel Kahn, "Getting Technical: The Bears are Circling the Market ", Barrons 5/21/2008.
- Michael Kahn, "Will Stocks Turn to Gold?", Barrons Getting Technical, 7/2/2009.
- John Hussman, "Green Shoots and a Grain of Salt", Hussman Weekly Comments, 6/29/2009.