If you're serious about trading, moving averages should be at the heart of your strategy. They are not just lines on the chart, but the foundation for reading trends, revealing momentum changes, and timing entries accurately.
Here are 6 moving averages that give you the edge whether you are day trading or over weeks:
✅ 1. 5-Day SMA – Quick momentum glance
Immediate reaction to price changes, excellent for day traders. Above it? Strong buy. Below it? Potential selling pressure.
✅ 2. 10-Day SMA – Swing trade filter
Removes noise and reveals true directional changes. Price crossing above it? Bullish momentum. Breaking it? Time to tighten the stop loss or reassess.
✅ 3. 20-Day SMA – The perfect entry point
In strong trends, price often bounces off it. Price dropping towards it in an uptrend? High probability buying opportunity. Bounce failure? The trend may be about to reverse.
✅ 4. 50-Day SMA – Trend guardian
A separator between noise and the true structure of the market. Above it? Healthy trend. Below it? Potential issues.
✅ 5. 100-Day SMA – The big picture line
Market test for this average? Signal of a deep correction zone. Price bounce? Significant reversals possible. Breaking it? Sales may escalate.
✅ 6. 200-Day SMA – The true compass of the market
The most important trend line, relied upon by institutions to determine market direction. Above it? Bull market. Below it? Caution and defensive strategies are necessary.
💡 Why these six?
Each average has a specific role: short momentum, trend strength, reversal points, or long-term trend. Together, they form a strong framework for making smarter, more confident trading decisions.
Whether you’re trading Forex, stocks, indices, or crypto, a serious trader doesn’t just look at them, but builds their strategy around them.