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Given we are using multiple moving averages that must line up, EMA’s are the better choice. The SMA is a slower moving average in regards to changes in price. You can use simple moving averages with this approach however they will not be as responsive to price changes.

When we get an mix of trend directions, we are conservative with profit targets and must exit when facing adverse price action.

Your trading strategy has to outline exactly what trades you will take. There can be trading opportunities in line with the shorter term trend and against the longer term trend direction. There will be many times where the 9 EMA will crossover the 21 period moving average which will turn the short term trend against the longer term trend.

If it crosses below the 21 while already below the 55, that is a down trend and looking for a sell trade.

The 9 EMA crossing over the 21 while already above the 55, is an uptrend and looking for a buy trade.

The 9 period short term moving average will be seen crossing over and under the 21 period more times than crossing the 55:

The 21 should be above the 9 and below the 55 for a down trend.

We want to see the 21 below the 9 and above the 55 for an uptrend.

The 21 period exponential moving average is considered a medium term trend indicator:

When the indicator is above both of the shorter term moving averages, we will consider the longer term trend to be down.

When the 55 EMA is below both the 9 and 21, we will consider the trend to be up.

The 55 period long term moving average will be considered the longer term trend direction indicator:

55 period exponential moving average (some will use the 50 EMA moving average but it doesn’t really matter).

The Triple Moving Averages – What Do They Represent?Īs I mentioned, the 3 exponential moving averages will have a different lookback period and they will be: The main difference between using 2 moving averages, such as the Golden Cross strategy, and 3 averages is having a longer term trend direction. That is not a bad thing as times when the trend is changing can make for some sloppy trading conditions. You must keep in mind that the lagging nature of moving averages, even EMA’s, will not enable picking tops and bottoms.

We can see a shorter term trend to determine if we will be taking a with trend or counter trend trade.Shows us the longer term trend direction and if the shorter term trend is in our favor.The benefits of using a triple exponential moving averages trading strategy? You can develop many strategies using moving averages but remember that complex trading strategies are not always best.īoth day traders and swing traders can benefit from a moving average. There is no magic in moving averages but they can be used to form the basis of a simple trading strategy that works. Using moving averages, instead of buying and selling at any location on the chart, can have traders zoning in on a particular chart location.įrom there, traders can use various simple price action patterns to decide on a trading opportunity. You can see how MA’s can give you information about market states by looking at the Alligator trading strategy that I posted a while ago. The three moving average crossover strategy is a trading strategy that uses 3 exponential moving averages of various lengths.Īll moving averages are lagging technical indicators however when used correctly, can help frame the market for a trader.