What is Moving Average?
A moving average is the average of the last N prices, recalculated on every new bar, which smooths price into a single line that shows the direction of the trend.
How it works
A simple moving average (SMA) weights every price in the window equally. An exponential moving average (EMA) weights recent prices more, so it reacts faster. Traders compare price with an average, or compare a fast average with a slow one. The 50-day crossing above the 200-day is called a golden cross and the reverse a death cross.
What it can't tell you
Every moving average lags, since it is built from past prices. Crossover rules tend to arrive after a move has started and give back gains when price chops sideways.
How Tickfloor uses it
Tickfloor's agreement score uses EMA alignment (9, 21, 50 and 200 periods) as one of its ten inputs.
Does it work as a strategy?
Tickfloor backtested 4 rules that use a moving average, net of modelled trading costs, against a benchmark of the same assets. 1 rule was ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use a moving average, and a historical diagnostic, not validation under Testing Standard v2.
Tickfloor's research desk has backtested 517 strategies, most against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs). After correcting for the 598 tests run (Benjamini-Hochberg), 0 passed. That does not prove no strategy works. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
- Moving Average Crossover: the full test
- Golden Cross / Death Cross: the full test
- 9/21 EMA Cross: the full test
- The 200-day rule on SPY: the full test
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Common questions
What is Moving Average?
A moving average is the average of the last N prices, recalculated on every new bar, which smooths price into a single line that shows the direction of the trend.
How does Moving Average work?
A simple moving average (SMA) weights every price in the window equally. An exponential moving average (EMA) weights recent prices more, so it reacts faster. Traders compare price with an average, or compare a fast average with a slow one. The 50-day crossing above the 200-day is called a golden cross and the reverse a death cross.
Does Moving Average work as a strategy?
Tickfloor backtested 4 rules that use a moving average, net of modelled trading costs, against a benchmark of the same assets. 1 rule was ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use a moving average, and a historical diagnostic, not validation under Testing Standard v2.
What are the limits of Moving Average?
Every moving average lags, since it is built from past prices. Crossover rules tend to arrive after a move has started and give back gains when price chops sideways.
How does Tickfloor use Moving Average?
Tickfloor's agreement score uses EMA alignment (9, 21, 50 and 200 periods) as one of its ten inputs.