Moving Average Crossover

A crossover is arithmetically equivalent to the shorter average's rate of change turning relative to the longer one, so it contains no information beyond the underlying prices — it is a legibility device. Because both averages lag, a crossover always occurs after the move it describes has begun, and in range-bound conditions the two averages cross repeatedly, producing whipsaws and a string of small losses. Any published win rate for a crossover system is highly sensitive to the two periods chosen, which is where curve-fitting most often enters. This entry describes the mechanic and makes no claim that a crossover indicates future direction.