Skip to content Moving averages are without doubt the most popular and effective technical indicators in trading. Whether you're new to the stock market or want to refine your trading strategy, these simple yet powerful tools will transform the way you analyze trends and make decisions on the financial markets.
Technical indicator
Trading with moving averages is a fundamental skill that every investor needs to master. These versatile indicators are suitable for all trading styles and markets.
Moving average definition : A moving average is a technical trading indicator that smoothes price fluctuations by calculating the average price over a given period. This average "moves" (hence the term "moving") with each new datum, creating a fluid line that follows the general price trend.
The 3 main types of moving averages :
SMA (Simple Moving Average) - Moyenne Mobile Simple
EMA (Exponential Moving Average) - Moyenne Mobile Exponentielle
WMA (Weighted Moving Average) - Moyenne Mobile Pondérée
English moving average : we commonly use the terms "Moving Average" or "MA" followed by the number of periods (MA20, MA50, etc.).
Advice : Moving averages transform market "noise" into a clear trend. The longer the period, the smoother the average, but the slower it reacts.
Moving averages serve several essential functions in technical analysis:
Identify the trend :
- Above-average price = upward trend
- Price below average = downward trend
Detect dynamic supports and resistances : Averages act as rebound or break levels
Generate buy and sell signals: Cross-referencing prices and averages provides entry points for
Filtering out false signals : They help confirm real movements vs. temporary corrections
Visit simple moving average calculates the arithmetic mean of closing prices over a given period. This is the most basic but also the most widely used.
SMA20 calculation: (Price J1 + Price J2 + ... + Price J20) ÷ 20
Advantages :
- Easy to understand and interpret
- Smoothes out erratic movements
- Ideal for identifying underlying trends
Disadvantages :
- Reacts slowly to price changes
- Can give late signals
Visit exponential moving average gives more weight to recent prices, making it more responsive to market changes. Visit exponential moving averages are particularly popular with day traders.
EMA features :
- Faster response to new prices
- More in line with recent trends
- Generates more signals (beware of false signals)
Important information: EMA is more sensitive, so perfect for day trading, but can generate more noise on short time units.
Visit weighted moving average assigns different coefficients to each period, generally in favor of the most recent data.
Using WMA :
- Compromise between ADM and EMA
- Less used in practice
- Interesting for specific strategies
In a nutshell: SMA for general trend, EMA for reactivity, WMA for specific needs.
Which moving average to use? Each moving average period has its own specificity and use:
MA20 (20-period moving average) :
- Use: Short-term trend
- Responsiveness: Very responsive to change
- Ideal for : Day trading, fast signals
MA50 (50-period moving average) :
- Use: Medium-term trend
- Reactivity: Balance between reactivity and stability
- Ideal for : Swing trading, confirmations
MA100 (100-period moving average) :
- Use: Long-term trend
- Reactivity: Stable, few false signals
- Ideal for: Investment, macro vision
MA200 (200-period moving average) :
- Use: Major trend
- Reactivity: Very stable, reliable signals
- Ideal for : Major support/resistance, bull/bear market
Moving average hierarchy :
When MA20 > MA50 > MA200 = Strong uptrend
When MA20 < MA50 < MA200 = Strong downtrend
Practical use in a moving average strategy :
- MA20: Tactical entries and quick exits
- MA50: Confirmation of medium-term trend
- MA200: Major trend filter (trade only in direction)
Conseil Pro : Never trade against the MA200 on long timeframes. It represents the underlying market trend.
| Criteria | SMA (Simple) | EMA (Exponential) | WMA (Weighted) |
|---|---|---|---|
| Calculation | Simple arithmetic mean | Exponential weighting of recent prices | Increasing linear weighting |
| Reactivity | Slow | Fast | Moderate |
| Smoothing | Excellent | Medium | Good |
| False signals | Little | Many | Moderate |
| Ideal for | Long-term trends | Day trading, scalping | Swing trading |
| Timeframes | H4, Daily, Weekly | M15, H1, H4 | H1, H4, Daily |
| Beginners | Perfect | Good | Difficult |
| Popularity | Widely used | Popular | Little used |
My recommendations:
Getting started : Start with the SMA to understand the concepts
Day trading: Focus onEMA for greater responsiveness
Investment : Use the SMA to filter out market noise
Combination : SMA200 + EMA20 = excellent mix of stability and responsiveness
Configure moving average TradingView is simple with this method:
Configuration on TradingView :
Step 1: Open your TradingView financial chart
Step 2: Click on "Indicators" in the top toolbar.
Step 3: Type "Moving Average" or " moving average"
Step 4: Test and select the one that suits your needs from the results. Some offer a single MM, while others allow you to set up several MMs and choose their type (SMA, EMA).
Step 5: Once you've found the indicator that's right for you, don't forget to click on the star to save it as a favorite and find it more quickly the next time you use it.
Recommended settings :
- Period: 20, 50 and/or 200 according to your needs
- Source: Close (closing price)
- Type: SMA or EMA depending on your strategy
- Color: differentiates each average (e.g. MA20 red, MA50 blue, MA200 green)
Example of a multi-means configuration :
MA20 EMA - Red color
MA50 SMA - Blue Color
MA200 SMA - Green color
Mobile tip : On the TradingView app, once you're on a chart, you have access to Indicators in the bottom functionality bar, and you can add your own moving average indicator very easily.
A moving average crossing occurs when a "fast" average (short period) crosses a "slow" average (long period).
Bullish cross : Fast average above slow average = Potential buy signal
Bearish cross : Fast average BELOW slow average = Potential sell signal
Trading setup with MM20 MM50 cross:
Buy signal at the intersection of the 20 and 50 moving averages:
MA20 crosses MA50 upwards
Both averages are trending upwards
The price is above both averages
Volume up (confirmation)
Sell signal:
MA20 crosses MA50 downwards
Both averages on a downward trend
Price falls below both averages
Golden Cross: When the MA50 crosses the MA200 upwards = Major bullish signal
Death Cross: When the MA50 crosses the MA200 downwards = Major bearish signal
This 50 and 200 moving average crossing is particularly powerful because it involves :
- A change in the long-term trend
- A high probability of continuation
- Major movements over several weeks/months
To find out more : Read our full article on the Golden Cross and Death Cross strategies.
Confluence of moving averages
The confluence technique consists in using several moving averages simultaneously to identify zones of high probability.
3-average configuration :
- MA20 EMA (short-term)
- MA50 SMA (medium-term)
- MA200 SMA (long term)
Bullish confluence zone :
When MA20 > MA50 > MA200 AND all three averages are trending upwards
Moving averages and position management
Trailing stop with moving averages :
- Long position: Move your stop below the MA20 or MA50
- Short position: Move your stop above the average
- Release: When the price definitely breaks the average
Moving averages by timeframe
Scalping (M1-M5): MA5, MA10, MA20 for ultra-fast signals
Day Trading (M15-H1): MA20, MA50 to balance responsiveness and reliability
Swing Trading (H4-Daily): MA50, MA100, MA200 for lasting trends
Investment (Weekly-Monthly) : MA100, MA200 for general management
It's time to test your knowledge of moving averages!
Your MM challenge :
Open TradingView and choose your favorite asset
Configure 3 moving averages: MA20 EMA, MA50 SMA, MA200 SMA
Analyzing the current trend: Are the averages aligned?
Identifies the latest MA20/MA50 crosses over the last 3 months
Simulate a strategy: What would your gains/losses have been?
Take a screenshot and share with #MMChallenge
Bonus questions :
- What's the trend according to MA200?
- Is there an interesting confluence zone?
- Can you identify a recent Golden or Death Cross?
Pitfalls to avoid
Error #1: Using too many averages Solution: Limit yourself to a maximum of 2-3 averages to avoid confusion.
Error #2: Ignore general trend Solution: Always check the MA200 before taking a position.
Error #3: Periods not adapted to timeframe Solution: MA20 on M15 ≠ MA20 on Daily, adjust to your style
Error #4: Blindly following crossovers Solution: Combine with volume, support/resistance, market context
Error #5: Forgetting risk management Solution: Always set your stop-loss BEFORE entering a position
Trend markets : Moving averages excel, use longer periods
Ranging markets : Beware of false signals, prefer other indicators
High volatility : Use EMA for greater reactivity, widen your stops
Do you want to master moving averages and develop a profitable trading strategy?
Our trading course for beginners contain a complete module on moving averages:
- SMA/EMA chapter : Master the 3 types of averages
- Crossbreeding strategies : Golden Cross, Death Cross and advanced techniques
- Technical interpretation : Signal reading and confluence
- Risk management : Money management with moving averages
- Case studies : Real-time analysis of different markets
Moving averages are the foundation of any sound trading strategy. Their simplicity should not obscure their effectiveness: used correctly, they can transform your performance on the financial markets.
Final tip: Moving averages are not just another technical indicator. They represent the market consensus over a given period. Learn to "listen" to them, and they'll guide you towards more consistent and profitable trades.
Ready to trading with moving averages ? Take our #Mhallenge and show us your analysis!
To go further and master all the subtleties of moving averages, join our comprehensive training course where you'll learn how to create winning strategies and optimize your performance.
Jonathan Bardon
An independent pro trader since 2012 and an Ichimoku expert since 2017, Jo is our trading trainer at the training center. Xenesy.
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