Best 50 vs 200 Day Moving Average

Crossover Strategy
Enter trades. Let them play out. Pro t.

Those are the goals of trading.

But if you have never traded before — or maybe you are not pro table yet — those seven words
can be extremely intimidating.

Trading is not as easy as it sounds, but it's a simple process when you have learned how to trade.

The good news; while it can be dif cult for beginners to trade, it's not impossible.

The moving average is the most popular trading indicator used by traders.

Here's how to trade the moving average crossover strategy to trade successfully.

How To Trade The Moving Average Crossover

One of the best moving average crossover strategies for swing and trading trading to nd and
trade the trend is the 200 day moving average and the 50 day moving average golden cross rule.

This strategy should not be used as an entry signal on its own but rather be used to de ne the
current big picture trend and also give you an idea when to go long or short.

It's one of the most beginner friendly moving average strategies when traded correctly.

Important; do not simply go short or long when you get the crossover, price action will be
extended at that time so it's better to wait for a retrace to a resistance or support level before
you take the entry.

Two Moving Average Crossover Strategy Explained

The moving averages we will look at is the simple moving average 50 periods and the 200 periods
and as you can see in the example below when we have a downtrend the 50 moving average will
be below the 200 moving average and when we have an uptrend the 50 moving average will be
above the 200 moving average.

You can easily set up these moving averages on a technical analysis charting platform.

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 You can see that the 200 moving average is the black line and the blue one is the 50 moving
average.

EURUSD 1-hour chart by TradingView

The 50 moving average is adopting faster to new price movements so it follows price faster if we
have a quick down move the 50 moving average will start sloping faster and steeper than the 200
moving average will.

These are the best moving average for swing and day trading since they can be used for both
support and resistance levels and as trend direction indication. They work on all markets
including forex, stocks, crypto, indices, commodities, etc.

You can also use the moving averages with other technical analysis techniques for more
con uence.

One of the best moving average strategy is the crossover strategy namely the golden cross. The
golden cross rule is when the 50 moving average cross over the 200 moving average from below
this a bullish sign that the trend might be changing from bearish to bullish.

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 EURUSD 1-hour chart by TradingView

An important note here again, you will probably not be pro table trading this strategy just as a
buy signal when the 50 moving average crossover the 200 moving average because you will
probably be in too late. So what I recommend is when you get the crossover wait for a retrace to
support level and take entry on that support level if you get a buy entry signal.

Following this simple rule will make this one of the best moving average crossover strategies for
swing trading and day trading.

Same is true for the bearish golden cross, so when the 50 moving average cross over the 200
average from above you get a bearish golden cross and you do not want to take entry when you
have the cross, you want to wait for a retrace and take entry on that resistance level if you get a
sell entry signal.

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 EURUSD 1-hour chart by TradingView

Then you want to trade bearish signals as long as you have the bearish trend in check, you have
the 50 moving average below the 200 moving average. You can continue to trade resistance
levels and go short at them.

So when do you take pro t? A good take pro t level is the next strong support or resistance level.
You can also follow 10X Trading System signals to nd market bottoms and tops where you can
take pro ts.

50 And 200 Day Moving Average Rules

Uptrend – Buy at support levels if you get an entry signal as long as MA 50 is above MA 200.

Downtrend – Sell at resistance levels if you get an entry signal as long as MA 50 is below MA 200.

Trend reversal (downtrend to uptrend) – MA 50 crossover MA 200 from below. Wait for a
retrace to a support level like resistance becomes support or support at the moving average 50
before you buy.

Trend reversal (uptrend to downtrend) – MA 50 crossover MA 200 from above. Wait for a
retrace to a resistance level like support becomes resistance or resistance at the moving average
50 before you sell.

Pro table Moving Average Strategy

To trade moving averages pro tably you want at trend and support and resistance level in
con uence.

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 What is con uence trading?

Con uence occurs when two or more technical analysis techniques give you the indication to
trade.

This is very powerful for you as a trader because it can help you get better accuracy and
pro tability.

For example, con uence happens when support and resistance levels are closely in line with
trend when you get a buy or sell entry signal. Fibonacci retracement and extension levels, round
numbers, and previous swing highs and lows can also act as strong levels.

Con uence trading works on all time frames and no matter if you trade forex, stocks,
commodities, etc.

The more techniques that con uence, the higher the probability trade setup you have.

Here are 3 techniques to nd strong levels you can use in con uence with the moving averages:

1. Trendlines Support And Resistance Levels

GBPJPY 1-hour chart by TradingView

One easy technical analysis technique to nd support and resistance is to draw trendlines.

By drawing trendlines between bottoms and tops, you nd good support and resistance levels.

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 You can extend this into the future as long as they stay unbroken.

An advanced technical analysis technique is to copy the trendline in the chart above and connect
it tops to be used as a good take pro t target.

You can also draw a mean line between the upper resistance trend line and the lower support
trend line. The mean trendline is a very strong support and resistance level most traders forget.

2. Fibonacci Retracement Support And Resistance Levels

GBPJPY 1-hour chart by TradingView

Fibonacci retracement is a very good technical analysis technique to nd strong levels of support
and resistance. You draw a Fibonacci between the high and low of a strong price moves either up
or down.

When you draw a Fibonacci a number of horizontal lines are drawn automatically.

The strongest lines are at 0%, 38.2%, 50%, 61.8%, and 100% of the length of the price move.

My favorites are the 50% and 38.2% (some platforms show 61.8%) Fibonacci retracement levels.

The zone between the 50% and 38.2% level is called the golden zone (you often see price bounce
here).

3. Change Of Polarity Support And Resistance Levels

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 GBPJPY 1-hour chart by TradingView

The change in polarity technique is a way of nding strong levels, once a level is broken, a support
level becomes a resistance level. Similarly, a resistance level becomes a support level once it's
broken.

For example, in the chart above you can see price bounce on resistance levels. When the
resistance levels nally break, there is a high probability these levels will act as a support levels in
the future.

Look closely in the chart above and you will see some more examples of both support becomes
resistance level and resistance becomes support level. I quickly identi ed 9, can you nd them?

Moving Average Entry And Exit Points

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 GBPJPY 1-hour chart by TradingView

When you have done your technical analysis, found the trend and a strong support or resistance
level, you want to nd an entry signals with a good risk reward ratio.

Following 10X Trading System buy and sell signals, you get entry signals with a good risk reward
ratio.

Buy Trade Entry Point:

Trade 10X buy signal when trend is up and you are at a support level. Place stop loss below
support.

Buy Trade Exit Point:

Take pro t on 10X sell signal at new high or take pro t using trailing stop loss.

Sell Trade Entry Point:

Trade 10X sell signal when trend is up and you are at a support level. Place stop loss above
resistance.

Sell Trade Exit Point:

Take pro t on 10X buy signal at new low or take pro t using trailing stop loss (at explained 2:00
in the video).

3 Moving Average Crossover Strategy

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 You might think that the three 50, 100, and 200 moving average crossover strategy is better to
identify trends and nd entries based on those trends than the two moving average strategy.

However, this strategy has without a doubt its drawbacks, and it is important you understand its
drawbacks before using it in your trading.

One of the main drawbacks of the three 50, 100, and 200 moving average crossover strategy is
that it can result in too much "noise" on your chart. When you plot multiple moving averages on
the same chart, it can be dif cult to read the signals and you lter out too many good signals.

Because the 100 moving average is slower than the 50 moving average you are also likely to get
late entries as 100 is lagging price more.

TSLA daily chart by TradingView

Another issue with using three moving averages is that the shorter-term averages (50 day and
100 day) can be prone to more false signals in identifying the underlying trend than the longer-
term average (200 day).

One way to avoid this is to use only the 50 day and 200 day moving averages. The 50 vs 200 day
moving average crossover strategy help to reduce the amount of noise on your chart and is
usually more reliable in identifying the underlying trend.

Magnet 200 Day Moving Average Rule

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 TSLA daily chart by TradingView

Can you only use the 200 moving average?

Well, the magnet 200 day moving average rule is a trading strategy that involves only using the
200 day moving average as a key level of support and resistance.

You sell if price is trading above the 200 day moving average with the moving average as take
pro t target and buy if price is trading below the average with the moving average as take pro t
target.

This strategy is based on the idea that prices tend to revert to the average over time and that the
200 day moving average represents a magnet, level of support and resistance.

While the magnet 200 day moving average rule is not a widely known trading strategy, it can be a
pro table one if you identify reversals after extended and exhausted trends and take advantage
of them.

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 Johan Nordstrom is a full-time trader, and a family guy in his early 30's who trades the markets in a
simple yet effective way. He has a master's degree in risk management and years of experience trading
the markets. He has helped hundreds of struggling traders become consistently pro table. Read more.

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