There are thousands of different indicators for swing trading out there, and it can be really confusing to know which one to use.
Moving averages are probably the most common indicator for swing trading. But which one should you use, and will they actually help with your trading?
In this article, I’ll talk about which moving averages I personally use for my swing trading and what I use each of them for. I will also speak about whether you really need them at all. So let’s dive straight into it.
In This Article:
What I’m Using Moving Averages For
I’m a swing trader who uses very few indicators, and basically, I’m just using price action, volume, and moving averages. I really think the more indicators you use, the more conflicting thoughts you will get.
I could probably also trade completely without moving averages, since I mostly use them as a guide to the stock’s trend and as a trailing stop. I use the faster 10- and 20-simple moving averages to trail my positions, and I wait for a red close below them. For the longer ones, 50, 100, and 200, I use them to see the overall trend in the stock better.
Simple vs. Exponential Moving Averages
There has always been a debate over whether simple or exponential moving averages work best for swing trading. The exponential moving average reacts more quickly to price movements, while the simple moving average is a bit slower.
For swing trading, you can use whatever you want and whatever you think works best for you. I really don’t think it matters too much, since you will primarily use them as guides, and they are pretty similar in that way.
I found simple moving averages work best for me, and I did all my studying with them, so I stick to them, even if in some cases the exponential moving averages might work better.
The best moving averages for Swing Trading
Which moving averages are best for swing trading is challenging to say. I would say it depends on what you are most comfortable with and what you have studied charts with. Here are the moving averages I think are the best, and I will explain what I use each one for.
1. 10 Simple Moving Average
The 10 simple moving average is the fastest I use, and also the one I use as a trailing stop in most of my positions. In high-momentum stocks that go up a lot quickly, it will give you a good mix of taking profits at a good time.
Using slower-moving averages may result in you giving back a lot of profits in many stocks, and faster ones will kick you out of the long-term move too often.
2. 20 Simple Moving Average
The 20 SMA is another moving average I sometimes use to trail my sell stop when trading stocks I think will trend up for a long time. I also like taking breakout setups within momentum stocks using this moving average. You usually want to see the 20 moving average rise at a 45-degree angle, and when the price touches it over a few tight days, it’s usually a good entry point.
You can learn more about this in my article about the swing trading setups that I trade.
3. 50 Simple Moving Average
I almost never use the 50 simple moving average as a trailing stop. However, if you are trading slower names in a multi-month uptrend, I know some traders who use the 50 SMA for this. For my trading, I find that I give back too much profit if I trail with the 50 SMA.
I find the 50 SMA better for taking setups near it, especially if it’s rising and the price undercuts and reclaims the 50 moving average. It’s also a good scan criterion I use; I very rarely take long setups that are below the 50 moving average.
4. 100 Simple Moving Average
The 100 simple moving average is probably the one I use the least. I would say I use the 200 SMA more, but the 100 simple moving average can be excellent to identify the trend. It can also be helpful to know when base breakouts are ready to break out by identifying where the 100 SMA is relative to the 200 SMA.
5. 200 Simple Moving Average
The 200 SMA is a major moving average, and I mainly use it to identify trends and keep it in my scan criteria, as I rarely trade stocks below it. Stocks below the 200 SMA are usually very weak, and they should only be traded below it if you are going to trade some squeezes or similar shorter-term trades.
Weighted, Hull, Front-Weighted Moving Averages
There are also several other types of moving averages, like the weighted, front-weighted, and Hull moving averages. These aren’t really something I use in my trading, so I can’t talk too much about them, but I’m sure there are some good use cases.
Final Thoughts
Moving averages are a big debate in the trading community, and many people swear they are useless, and I can understand where they come from. However, I find them great for using as a trailing stop, as they will keep you in a position for a long time, and they also work well as guides to the overall stock trend.
If you have any questions, feel free to ask them in the comments below. If you want to learn more about the setups I trade, you can find me on X/twitter where I post setups and share some other trading insights.
