SMA Crossover
SMA Crossover enters a long trade when a short-period moving average rises above a longer-period moving average (an uptrend signal) and exits when the short average falls back below the lon…
SMA Crossover enters a long trade when a short-period moving average rises above a longer-period moving average (an uptrend signal) and exits when the short average falls back below the long average. It's a trend-following strategy: it holds a position for as long as the shorter average stays on top, rather than reacting to single-candle moves.
How it trades
| Ingredient | Meaning |
|---|---|
| Short SMA | Simple moving average over a short lookback (e.g. 3 candles) - reacts quickly to price |
| Long SMA | Simple moving average over a longer lookback (e.g. 5 candles) - represents the underlying trend |
Buy:
shortSma > longSma
Sell (only when already in a position):
shortSma < longSma
When it works best
Works best in a trending market where a move, once started, tends to continue for a while - the strategy is slow to enter (needs the short average to already be above the long one) and slow to exit (needs the reverse), so it gives back some of the move at both ends in exchange for staying out of most whipsaws. In a sideways, range-bound market, expect the two averages to cross back and forth repeatedly, generating a string of small losing trades.
Backtest this strategy yourself
Build these rules on the Free plan, adjust them, and see how they would have traded.