SMA 10D & 25D Cross Over Strategy

A Simple Moving Average (SMA) Cross Over Strategy is a trading strategy that uses simple moving averages to indicate whether it is time to buy or sell a financial instrument (a stock for example). The idea is the trader should go long on a financial instrument when the shorter-term SMA is above the longer-term SMA. Likewise, the trader should sell or go short when the longer-term SMA is above the shorter-term SMA. The above graph visualizes when to go long and when to go short. When the shorter-term SMA is greater than the longer, plot 1 as a signal to go long. Otherwise, plot -1 as a signal to go short.