One of the most basic technical signals when it comes to making a determination as to whether to buy or sell a stock or other investment can be found with a Triple Moving Average Crossover. Depending on the direction of the crossover, a buy or sell signal is generated and traders can make their trades accordingly.

Moving Average (MA) Defined Based on the average value of a security, a moving average considers past closing prices over a given period of time. Since the MA is be based on historical prices, the lagging data must not be used in isolation. The longer the moving average, the more lagging it will be; the shorter the period, the less lag. As a result of this lag, the triple moving average crossover works best in clear markets where there is a definite trend, and not so well in sideways or choppy markets.

What is a Triple Moving Average Crossover A triple moving average crossover is a technical indicator as to the direction of a stock price. This type of indicator is triggered when a short moving average crosses over a medium moving average, and the medium crosses over the long moving average. Typically, analysts will use the 4-day moving average for the short MA, the 9-day for the medium MA, and the 18-day for the long MA.

Consequently the triple moving average crossover will see the 4-day crossover the 9-day and the 9-day crossover the 18-day. Now that all three moving averages have crossed one another, the analyst makes a recommendation on a trade.

How to Trade Using the Triple Moving Average Crossover As one of the simpler technical indicators trade, the triple moving average crossover signals a buy signal when the three moving averages cross one another on an UP trend, and a sell signal when that trend is headed downward. In most cases, analysts will issue a bullish / bearish signal (instead of buy / sell).

Making decisions on current or prospective positions should rarely be based on a triple moving average crossover by itself. It is strongly recommended that analysts and investors confirm or refute the signal by reviewing the MACD (moving average convergence-divergence) and Momentum before entering or exiting a position based on technical indicators such as this.

Since reviewing multiple technical indicators and signals can become a full-time job for dozens of analysts, many traders can benefit from the assistance of trading software, which can compute thousands of complex signal on a daily basis and return simple buy or sell recommendations.

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