Moving Averages and Crossovers
SMA(14) is on your chart — here is what it does and doesn’t tell you.
Written and reviewed by the Fundezy team · how we produce this
A moving average (MA) is the mean of the last N closes, recalculated every bar. It is the single most used indicator because it answers one question crisply: where is price relative to its recent average?
The Fundezy chart has SMA(14) built in — the average of the last 14 closes, drawn as an orange line.
What an MA gives you
- Direction filter — price above a rising MA is a bullish environment; below a falling MA, bearish.
- Dynamic support — in healthy trends, pullbacks often stall at the MA.
- Noise reduction — the MA line makes trend changes visible earlier than eyeballing bars.
What it can't do
An MA lags by construction — it is built from past prices and will always turn after price does. Shorter periods (SMA 10) hug price with more whipsaws; longer periods (SMA 50) are smoother but slower. There is no magic period; there is only a trade-off between responsiveness and noise.
The crossover system
The classic entry: a fast MA crossing a slow MA. Fast above slow = bullish; fast below = bearish. The golden-cross/death-cross language you'll hear everywhere is just the SMA-50 crossing the SMA-200.
This exact strategy runs as the platform's first EA example — a Simple MA Crossover expert that buys when the fast average crosses above the slow one and sells when it crosses back. You'll dissect and backtest it in Course 06.
One platform detail that matters everywhere
Indicators need history before they mean anything. The platform's indicators return 0 (or a neutral value) until enough bars exist for the period — SMA(14) needs 14 bars. Any algorithm reading indicators must guard against this warm-up: the example EA explicitly checks the averages are valid (> 0) before acting. It's the most common bug in first EAs: trading garbage values during warm-up, often producing a phantom "signal" on bar one.
Practical use
Pair one MA with structure (Course 02, lesson 2): in an HH/HL uptrend, buy pullbacks to the SMA; use the SMA's slope as your regime filter — flat MA, no trend, no trade.
By the numbers
A simple moving average lags by construction: its delay is (N−1)/2 bars, so SMA(14) trails price by about 6.5 bars and an SMA(200) by about 100 — no tuning removes that. The most-watched crossover pairs remain the SMA-50 and SMA-200, the "golden cross" and "death cross" computed from 50 and 200 daily closes.
Practice in the simulator
Toggle SMA(14) on and watch pullbacks — apply what you just read with simulated money.
Check your understanding
4 questions · answer all, then submit.