Introduction
Moving averages are fundamental tools in a trader's toolkit, but many traders stick to the basics. Beyond the standard Exponential Moving Average (EMA) and Simple Moving Average (SMA) lie powerful, advanced indicators that can significantly enhance your intraday trading.
Professional traders leverage these sophisticated tools on platforms like TradingView to identify clearer entry points, optimize exits, and strengthen confirmation signals. This guide dives into five such advanced moving averages, explaining their unique features and how to use them effectively for day trading.
What Is a Moving Average in Trading?
A moving average (MA) is a technical analysis indicator that smooths out price data by creating a constantly updated average price. This average is calculated over a specific period, such as 10, 50, or 200 days. By filtering out random short-term fluctuations, it helps traders identify the underlying trend direction more clearly.
Common types of moving averages include:
- Simple Moving Average (SMA): The arithmetic mean of prices over a set period.
- Exponential Moving Average (EMA): Gives more weight to recent prices, making it more responsive to new information.
- Weighted Moving Average (WMA): Similar to EMA, it weights recent prices more heavily but uses a different calculation.
- Volume-Weighted Moving Average (VWMA): Incorporates trading volume, emphasizing periods with higher activity.
- Hull Moving Average (HMA): Designed to reduce lag and improve responsiveness while maintaining smoothness.
Each type reacts differently to price changes, making them suitable for various trading strategies.
Why Use Moving Averages?
Moving averages serve multiple critical functions for intraday traders:
- Trend Identification: They help determine if the market is in an uptrend, downtrend, or a ranging phase.
- Signal Generation: Crossovers between different MAs or between price and an MA can signal potential entry and exit points.
- Support and Resistance: Dynamic support and resistance levels often form around key moving averages.
- Momentum Confirmation: The slope and position of an MA relative to price can confirm the strength of a trend.
- Noise Reduction: By smoothing price action, they provide a clearer view of the market's direction.
Which Moving Average Is Best for You?
There is no single "best" moving average. The optimal choice depends on your individual trading style, the timeframe you operate in, and current market conditions.
- For Scalpers and Fast Signals: EMAs or HMAs are preferred due to their responsiveness to recent price action.
- For Swing and Position Traders: SMAs or WMAs are often better for identifying longer-term, stable trends.
- Timeframe Consideration: Lower timeframes (1-5 min) require faster MAs, while higher timeframes (1H-Daily) can use slower, more stable ones.
The key is to experiment and find which MA aligns best with your risk tolerance and strategy.
50-Day vs. 200-Day Moving Average
While more common for longer-term analysis, understanding the interaction between the 50-day and 200-day MA is valuable for all traders.
- 50-Day Moving Average: This is a medium-term trend indicator. It reacts more quickly to price changes than the 200-day MA and is widely watched by swing and short-term traders.
- 200-Day Moving Average: This is a long-term trend benchmark. It is slower and more stable, often used by institutional investors to define the primary market trend.
A key concept is the crossover between these two:
- Golden Cross: Occurs when the 50-day MA crosses above the 200-day MA, typically interpreted as a major bullish signal.
- Death Cross: Occurs when the 50-day MA crosses below the 200-day MA, viewed as a significant bearish signal.
How to Use a Moving Average to Buy Stocks
A simple, effective framework for using MAs in your buying decisions involves four steps:
- Identify the Dominant Trend: Use a longer-period MA (e.g., 200 SMA) to determine if the overall trend is bullish (price above MA) or bearish (price below MA). Only look for buys in an uptrend.
- Use Crossovers for Timing: Utilize a faster MA crossover for entry signals. A common strategy is to buy when a shorter-term EMA (e.g., 8) crosses above a longer-term EMA (e.g., 21).
- Add Confirmation: Increase the probability of a successful trade by confirming the MA signal with another indicator, such as the RSI being above 50 or rising volume.
- Manage Your Risk: Use the moving average as a dynamic support level to place stop-loss orders. For take-profit levels, look for previous resistance or a opposite MA crossover.
5 Advanced Moving Averages for TradingView
1. Moving Average Shift by ChartPrime
This is a multi-functional tool that combines trend direction analysis with mean reversion signals in a single indicator.
Key Features:
- Choice of MA type (SMA, EMA, SMMA, WMA, VWMA).
- Dynamic candle coloring based on the prevailing trend.
- A built-in MA Shift Oscillator to detect price deviation from the mean.
- Diamond-shaped signals that indicate potential reversal points.
How to Use It:
- Trade in the direction of the MA's color (e.g., green for bullish, red for bearish).
- Use shifts in the oscillator's color for early trend-change warnings.
- Consider diamond signals as potential areas for price reversals, ideal for counter-trend strategies.
Best For: Swing traders and mean-reversion scalpers.
2. SPY Moving Averages + Cross Signals
Popularized by OptionsMillionaire, this rigorous setup is tailored for options trading, particularly on the SPY ETF, using a combination of MAs and other indicators.
The Setup Includes:
- 8 EMA, 21 EMA, 100 SMA, and 200 SMA.
- MACD and RSI for additional confirmation.
- Hull Moving Average (HMA) for dynamic trend assessment.
Strategy Highlights:
- An 8/21 EMA crossover signals a potential trend change.
- Price being above the 200 SMA confirms a bullish bias.
- A green HMA background reinforces positive momentum.
- The strategy enforces strict discipline with clear rules.
How to Use It:
- Look for buy signals (e.g., for calls) when the 8 EMA crosses above the 21 EMA while price is above the 200 SMA.
- Confirm with RSI above 50 and a green HMA.
- Always employ strict risk management, such as a 10% stop-loss.
Best For: SPY options traders and disciplined, rule-based traders.
3. Auto-Length Moving Average by Zeiierman
This intelligent indicator automatically adjusts its length based on market volatility, trend strength, and momentum, reducing false signals in choppy markets.
Adaptive Features:
- Expands the MA period during strong trends for smoother signals.
- Contracts the period in sideways markets for faster reactions.
- Provides built-in visual signals for uptrend, downtrend, and neutral conditions.
- Can reset its filters based on RSI, MACD, volume spikes, Bollinger Bands, and other metrics.
How to Use It:
- Use the dynamic MA color as your primary trend filter.
- Combine the trend strength reading with an oscillator like RSI to confirm entries.
- Execute a trade when the automated signal aligns with the MA's direction.
Best For: Adaptive traders, swing traders, and beginners seeking to avoid market noise.
4. Adaptive Hull Moving Average+
An enhanced version of the classic HMA, this indicator uses a color-coded system to visually communicate trend strength and adapts to changing volatility.
Color Code System:
- Yellow: indicates consolidation or a ranging market (caution advised).
- Light Green/Red: signals a weak trend.
- Dark Green/Red: indicates strong momentum and a reliable trend.
Smart Settings:
- Adjustable period (settings between 172-233 are popular on 15-minute to 1-hour charts).
- Built-in alerts for volume breaks and volatility shifts.
Entry Strategy:
- Consider a buy when price is above the MA, the MA is dark green, and the RSI is above 50.
Best For: Intraday trend-followers and traders who rely on clear visual confirmation. 👉 Discover advanced trading tools
5. Triangular Hull Moving Average with Volatility by BigBeluga
This highly visual indicator combines THMA-based colored candles with volatility bands to identify trend direction and potential breakout points.
Key Features:
- THMA candles that change color based on the trend.
- Volatility bands that expand and contract, gauging breakout potential.
- Triangle signals that mark potential trend reversal points.
- A customizable dashboard displaying trend direction and volatility percentage.
How to Use It:
- Use a triangle signal combined with the THMA candle color for a high-probability entry.
- Confirm the signal with expanding volatility bands, suggesting an increase in momentum.
- Ideal for catching the beginning of new swing moves or breakout trades.
Best For: Momentum traders, breakout traders, and visual learners.
Conclusion
Moving averages are far more than simple lines on a chart. The five advanced indicators discussed here integrate sophisticated trend detection, adaptive price analysis, and intuitive visual cues to help you make smarter, more informed trading decisions.
For a reliable foundation, the classic 8/21 EMA crossover remains a solid choice. To elevate your trading, explore dynamic tools like the Moving Average Shift or the Auto-Length MA. Regardless of your approach, these powerful indicators on TradingView can provide the edge you need in the fast-paced world of intraday trading.
Frequently Asked Questions
What is the best moving average for intraday trading?
For intraday trading and scalping, the 9 EMA, 21 EMA, and 50 SMA are widely used for their responsiveness. However, adaptive moving averages like the HMA or Auto-Length MA are often superior as they automatically adjust to market conditions, helping to filter out false signals during choppy periods.
Which timeframes work best with moving averages?
The optimal timeframe depends entirely on your trading style:
- Scalping: 1-minute to 5-minute charts with short-period EMAs (e.g., 9, 21).
- Intraday/Day Trading: 15-minute to 1-hour charts.
- Swing Trading: 1-hour to daily charts.
- Position Trading: Daily to weekly charts, often using the 50-day and 200-day SMAs.
Can I use multiple moving averages together?
Absolutely. Using multiple moving averages is a common and effective practice. A popular method is a crossover system (e.g., using an 8 EMA and a 21 EMA) where the crossover generates the trade signal. This is often combined with a third indicator like RSI or volume for confirmation, creating a more robust trading system.
Which moving average is best for beginners?
Beginners should start with simple and widely understood moving averages. The 50-period SMA is excellent for identifying the basic trend, while the 21-period EMA offers a good balance of responsiveness and smoothness. Once comfortable, traders can gradually experiment with more advanced adaptive MAs. 👉 Learn more trading strategies