What Is the Moving Average Crossover Strategy

Two averages, and the days they crossed

The moving average crossover is a strategy built on two averages of different lengths. Here are gold's, from real daily closes through 2025: the average of the last twenty closes in blue and the average of the last fifty in gold. The two lines crossed five times in the year. On 17 January the faster line went over the slower, and it stayed over for six months; then between 30 July and 25 August they crossed four times in four weeks. The fast line sat above the slow one on 240 of the year's 258 days. The strategy is the two lines, and the day one passes the other.

The hands of a clock

Picture the hands of a clock. The minute hand goes round quickly and the hour hand creeps, and every so often the fast one passes the slow one; the passing takes a moment, and it happens wherever the two hands happen to be on the dial. The fast average is the minute hand and the slow average the hour hand. The strategy watches for the passing, not for a place on the dial: a crossover reads the same whether it happens at 2650 or at 3340, and it says nothing about either number.

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