When trying to make a decision on whether to buy or sell a particular security, the triplemoving average crossover can often provide partial guidance. As one of the most basic technical indicators, this technical indicator can provide a buy or sell recommendation based on the direction of the crossover, allowing traders to open or close positions accordingly.
What is a Moving Average A moving average draws out the average price of a specific security over a period of time. For example, a 4-day moving average will take the average security price over the past four days and draw it on the chart. Over time, this creates a trend-line. Since moving averages are based on historical data, they lag behind current stock prices. The nice thing about moving averages, however, is that short, medium and long terms can be used at the discretion of the investor or analyst, which makes them great indicators in clear-trending markets, although not so reliable in choppy, sideways markets.
Understanding the Triple Moving Average Crossover Using short, medium, and long moving averages, the analyst will plot all three on a chart. The indicator will give an indication as to the future direction of a security when it triggers a buy or sell signal. This happens when the shortmoving average crosses over the medium, and the medium crosses over the long moving average. The most popular and possibly reliable applications will see analysts using the 4-day, 9-day, and 18-day moving averages.
Consequently the triple moving average crossover will see the 4-day crossover the 9-day and the 9-day crossover the 18-day. Now that all three moving averages have crossed one another, the analyst makes a recommendation on a trade.
How to Trade Using the Triple Moving Average Crossover As one of the simpler technical indicators trade, the triple moving average crossover signals a buy signal when the threemoving averages cross one another on an UP trend, and a sell signal when that trend is headed downward. In most cases, analysts will issue a bullish / bearish signal (instead of buy / sell).
As a warning, however, trade decisions should not be based solely on the signal of a triplemoving average crossover indicator. In order to confirm or refute the signal produced, investors and analysts can easily rely on signals produced by the MACD and Momentum.
Since reviewing multiple technical indicators and signals can become a full-time job for dozens of analysts, many traders can benefit from the assistance of trading software, which can compute thousands of complex signal on a daily basis and return simple buy or sell recommendations.
What is a Moving Average A moving average draws out the average price of a specific security over a period of time. For example, a 4-day moving average will take the average security price over the past four days and draw it on the chart. Over time, this creates a trend-line. Since moving averages are based on historical data, they lag behind current stock prices. The nice thing about moving averages, however, is that short, medium and long terms can be used at the discretion of the investor or analyst, which makes them great indicators in clear-trending markets, although not so reliable in choppy, sideways markets.
Understanding the Triple Moving Average Crossover Using short, medium, and long moving averages, the analyst will plot all three on a chart. The indicator will give an indication as to the future direction of a security when it triggers a buy or sell signal. This happens when the shortmoving average crosses over the medium, and the medium crosses over the long moving average. The most popular and possibly reliable applications will see analysts using the 4-day, 9-day, and 18-day moving averages.
Consequently the triple moving average crossover will see the 4-day crossover the 9-day and the 9-day crossover the 18-day. Now that all three moving averages have crossed one another, the analyst makes a recommendation on a trade.
How to Trade Using the Triple Moving Average Crossover As one of the simpler technical indicators trade, the triple moving average crossover signals a buy signal when the threemoving averages cross one another on an UP trend, and a sell signal when that trend is headed downward. In most cases, analysts will issue a bullish / bearish signal (instead of buy / sell).
As a warning, however, trade decisions should not be based solely on the signal of a triplemoving average crossover indicator. In order to confirm or refute the signal produced, investors and analysts can easily rely on signals produced by the MACD and Momentum.
Since reviewing multiple technical indicators and signals can become a full-time job for dozens of analysts, many traders can benefit from the assistance of trading software, which can compute thousands of complex signal on a daily basis and return simple buy or sell recommendations.
