What it is
Two averages of the closing price are plotted together. The fast one follows price closely; the slow one represents the longer trend. When they cross, the short-term trend has overtaken the long-term one.
Crossovers are late by nature, because both lines are made of past prices. Their value is in keeping you on the right side of big moves and out of fights with the trend. In WickSpeak you can choose from 15 average types, including simple, exponential, weighted, Hull and KAMA, and turn the shading on or off.
How it is calculated
1. Work out the fast moving average of the closes, 50 candles by default, using the chosen type (EMA by default). 2. Work out the slow moving average, 200 candles by default, with the same type. 3. A cross up happens on the candle where the fast average closes above the slow one after being below it. A cross down is the reverse. 4. The space between the lines is shaded by which line is on top.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Type | EMA | SMA, EMA, WMA, HMA, VWMA, SMMA, DEMA, TEMA, TRIMA, ZLEMA, LSMA, KAMA, ALMA, T3, McGinley | How the averages are built. EMA reacts faster than SMA; HMA and ZLEMA are faster still; SMMA and TRIMA are smoother and slower. |
| Fast | 50 | 1 to 500 | Length of the quick average. Lower values cross sooner and more often. |
| Slow | 200 | 2 to 800 | Length of the slow average that represents the main trend. |
| Shading | on | on or off | Fills the gap between the two lines so you can see which side is on top. |
How to read it
How to trade it
- 1
Choose settings for your timeframe: 50 and 200 for daily and 4 hour charts, or faster pairs such as 9 and 21 for 15 minute gold.
- 2
After a golden cross on a 4 hour gold chart, do not chase the crossing candle. Wait for price to pull back to the fast average and close back above it.
- 3
Place the stop below the slow average or the pull-back low, whichever is closer and still logical, for example 20 to 30 points on 4 hour gold.
- 4
Trail the stop under the fast average and stay in until the lines cross back.
- 5
On US30, skip crosses when the two lines have crossed more than twice in the last 30 candles, as the market is ranging.
A trade on a golden cross is proved wrong when the fast line crosses back below the slow line, or price closes below the slow average and stays there.
WickSpeak runs in your browser with nothing to install. When you add the MA cross, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says which average is on top, how long ago they crossed, and whether the gap between them is growing or shrinking.
In Playbook, our no-code strategy builder, the MA cross can be a condition in a play. It can test whether the MA cross: fast line crosses above the slow line; fast line crosses below the slow line; fast line is above the slow line; fast line is below the slow line. Each condition can run on any of 12 timeframes from 1 minute to weekly, combined with up to 11 others, and the play can be backtested on past candles with your own costs and turned into alerts on screen, by email or by phone push.
Best markets and timeframes
Best on trending markets such as gold and US indices on 1 hour to daily charts. Use faster pairs for intraday work, but expect more false crosses.
Common mistakes
- Buying the crossing candle itself, which is often stretched far from both averages.
- Trading crossovers in sideways markets where the lines weave together.
- Changing the lengths after every loss to fit the last few trades.
Works well with
Questions traders ask
What is a golden cross?
A golden cross is when a faster moving average, usually the 50, crosses above a slower one, usually the 200. It is read as a sign that a longer uptrend may be starting.
What is the best moving average crossover for day trading?
Common pairs are 9 and 21 EMA or 20 and 50 EMA on 5 to 15 minute charts. Faster pairs give earlier signals but more false ones, so test any pair on the market you trade.
Should I use EMA or SMA for a crossover?
EMA reacts faster because it weights recent prices more, so it crosses earlier. SMA is slower and steadier. Many traders use EMA on intraday charts and SMA on daily charts, which is where the classic 50/200 cross comes from.
Do moving average crossovers work?
They tend to catch large trends but are late and give false signals in ranges. Results depend heavily on the market and settings, so test them on your own data, for example with Playbook's backtest, before trading them.