In the table below, we get an idea of how the results compare. 3 SMA Cross Up on 8 EMA 5 SMA Cross Up on 10 EMA 8 SMA Cross Up on 21 EMA 10 SMA Cross Up on 20 EMA 15 SMA Cross Up on 30 EMA 50 SMA Cross Up on 200 EMA Cumulative Results Let’s see if that additional weight aids in the results of the strategy. Many traders prefer to use EMAs because they give additional weight to the most recent price action. The clear loser of the bunch is the 50 SMA & 200 SMA cross, which netted a profit of only 1.89%. It has offered a return of +17.90% over the same period of time and only took about 1/3 the trades. Now, that might be a lot of trades for the less active trader, so an alternative with nearly the same results would be the 15 SMA & 30 SMA cross. The 5 SMA & 10 SMA cross is the clear winner here with a net profit of +19.12% over 383 trades.
In the table below, we can see how the results compare. 3 SMA Cross Up on 8 SMAĥ SMA Cross Up on 10 SMA 8 SMA Cross Up on 21 SMA 10 SMA Cross Up on 20 SMA 15 SMA Cross Up on 30 SMA 50 SMA Cross Up on 200 SMA Cumulative Results
Let’s dig into the results and see how these various crosses performed. The SMA is the most commonly used of the MAs, so we felt it the most appropriate moving average to start with. Let’s jump in! The Simple Moving Average (SMA) We’ll be utilizing the 15-minute time frame, we’ll be testing back 7,000 candles, and we’ll be running all tests on the $QQQ ETF. In addition, we’ll be testing each of the three types of Moving Averages listed above. We’re taking the bullish bias here, so we’ll be buying when they cross up and we’ll sell when they cross down. In this test, we’ll be looking at several different moving average combinations including: To answer this question, we’ve taken a look at some of the most commonly used moving average lengths and styles and utilized our Strategy Tester to find out which crosses work the best. What is less known is which length and style of moving average offer the best returns when day trading. One of the most common ways to utilize moving averages in day trading is to buy and sell when they cross. There are several different types of moving averages: Simple Moving Average (SMA), Exponential Moving Average (EMA), and Hull Moving Average (HMA), to name a few, but they all seek to perform a similar function To show us the average price over a specified period of time. One of the very first indicators that new traders learn about is the Moving Average.
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