Moving averages
You will learn to
- SMA vs EMA
- Use averages as a trend filter and dynamic support
- Why crossovers lag
What they are
A moving average is the average closing price over the last N candles, redrawn every candle. The simple average (SMA) weights all N equally; the exponential average (EMA) weights recent candles more, so it turns sooner. Common lengths: 9–21 (short-term), 50 (medium), 200 (long-term).
Three good uses
- Trend filter: only look for longs while price is above a rising 50 EMA (or the 20 is above the 50). This alone removes many counter-trend mistakes.
- Dynamic support/resistance: in a steady trend, pullbacks often stall near the 20 or 50 EMA — a location to look for a candle signal.
- Distance as stretch: price far above its average is extended; chasing there is late.
The crossover problem
A moving average is built from past prices, so it always lags. A 50/200 crossover ("golden cross") often arrives after much of the move. In ranges, crossovers whipsaw back and forth, each costing fees.
What our backtest found
An EMA 9/21 cross with a 4H trend filter is one of the Lab's starter examples. Like most indicator-only strategies tested here it did not beat random entries after fees — run it yourself in Lab → Backtest.Advertisement
Check yourself
1. Why does an EMA react faster than an SMA of the same length?
- It uses more data
- It weights recent prices more ✓
- It uses volume
Exponential weighting emphasises the latest candles.
2. The best use of a moving average for most traders is…
- Trading every crossover
- A trend filter and a pullback location ✓
- Predicting tops
Crossovers lag and whipsaw; filters and locations add context.
Terms in this lesson
- Golden / death cross
- 50 average crossing above / below the 200; lagging.
- SMA / EMA
- Simple / exponential moving average of closing prices.
Practise it on real charts. In the app, this lesson comes with real examples (reveal what happened next), a graded drill and the track test. Open the Academy in NexusCore — free →