Oh geez. Here we go. At the risk of making myself unpopular…
I’m afraid to say I too (like everybody else and his dog) (and his dog’s puppies too I’m sure) have tried moving average crossovers. They work. Until they don’t. And it is VERY easy to fall into the curve fitting trap with them. So I do agree that they will slowly but surely bleed capital away over time.
This being said: @Trendswithbenefits is essentially talking about PRICE closing above or below a moving average. Now it’s not something I’ve ever looked at to be honest. And those charts do look enticing. My only comment really: it appears the idea is great for an entry point and with a clearly defined stop which is maybe far away. But I don’t think waiting for a cross back over the MA to TP would work too well. Maybe trailing a stop once you’re in the trade??? Problem is as I’m sure if obvious: a 200-day SMA is very slow to react. So you’d be giving away a real nice chunk of profits by waiting for this as a signal to TP.
But to be frank: personal opinion is that MA crosses in and of themselves are not that fantastic. But once you have a cross and then wait for a pullback well maybe then. John F. Carter has a trading system based on just this and it does work. I just don’t have the patience for it. And I don’t like trading with stops. But essentially (and daily charts only): he has an 8-day EMA and a 21-day EMA. Once the 8 has crossed over the 21 you then wait for a pullback to the 8 with your stop somewhere around the 21 (although on the odd occasions I’ve tried this you normally get stopped out so under today’s market conditions may be preferable to use an alternate method for stop placement). I forget where TP was (but will look it up if anybody is interested).
But I guess what I’m saying is that I don’t think that MA crossovers in and of themselves are a profitable over time.
BUT LET ME SAY THIS TOO:
Those charts have had me think again about Wilder’s Swing Index System. I spent years (probably) in trying to get that system under my belt. Spent much time coding it as well. And I’ve been thinking about introducing it again maybe. I don’t quite understand why: but things that I just was not able to trade or grasp or understand some years ago are for some reason or the other very very clear to me since my return some years ago. Maybe I was just too caught up with things back then and couldn’t see the wood for the trees. Dunno. Will see.