Glossary
SMA Crossover
A trend-following strategy that buys when a short-term simple moving average crosses above a long-term SMA.
SMA crossover strategies are among the simplest systematic trading approaches. A golden cross occurs when a shorter SMA crosses above a longer SMA, while a death cross occurs when it crosses below. They are best suited to trending markets.
Key Points
- Common pairs are 50/200 and 20/50.
- Works best in strong trending markets.
- Often underperforms in choppy, range-bound conditions.