Single Moving-Average Trend Signals for Equity Trading

Summary

This tutorial explains simple moving averages and their use in equity trend strategies. It outlines common short-, medium-, and long-term averaging periods, describes how a moving average is calculated from closing prices, and introduces Granville-style rules that interpret the slope of an average and price crossings as possible entry or exit signals. Its worked example calculates short- and medium-term averages and buys when the shorter average is above the longer one, then exits when their ordering reverses.

The sample implementation applies the rule to one named stock and targets a fully invested position or a full exit. It also specifies example trading costs, slippage, and volume limits, which are relevant to simulated execution. The document includes a heading for backtest results but provides no results in the supplied text, so it offers no evidence of profitability. The example’s prose and code do not align perfectly on the average periods, and moving-average crossovers can lag price changes; the material is best read as an introductory strategy illustration rather than a validated system.

Key ideas

• A simple moving average smooths closing prices over a chosen lookback period.
• The described trend rules use average slope and price crossings as potential signals.
• The example buys when a shorter average exceeds a longer average and exits when the relationship reverses.
• The sample targets full exposure or no exposure in a single equity.
• No backtest results are supplied, and the example contains inconsistencies in its stated periods.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.