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Moving averages: SMA, EMA and the 20–50–200

The base of almost every system: SMA vs EMA, the 20/50/200 levels, and the golden and death cross.

What a moving average is

A moving average (MA) smooths price so the trend is easier to see. An SMA (simple) adds the last N closes and divides by N. An EMA (exponential) gives recent bars more weight (multiplier 2/(N+1)), so it reacts faster but is also noisier.

MA 20Short-term trend, common for trades lasting a few days.
MA 50Medium-term trend.
MA 200The long-term trend line, watched by a lot of investors.
On TradingViewMoving Average Simple / Moving Average Exponential

How to read them

  • Price above a rising MA: uptrend. Price below a falling MA: downtrend.
  • A flat MA with price crossing back and forth: a range, where MA signals work poorly.
  • Golden cross: the 50 crosses above the 200. Death cross: the 50 crosses below the 200. Both are slow signals, better for context than for entries.
  • In a trend, MAs often act as dynamic support or resistance.

How to trade them

  1. Use the daily 200 MA as a filter: above it look only for buys, below it only for sells.
  2. Enter when price pulls back to the EMA 20/50 and prints a confirming candle in the trend direction.
  3. Stop below the pullback low; trail the stop along the MA as price moves your way.
Watch outThere is no magic MA length. Pick one set, use it consistently and backtest it before risking real money.
TipFor a concrete MA system, see the EMA 34–89 lesson.

Try it on a chart

Educational content only, not investment advice. Practise on a demo account before using real money.