The World’s simplest ( and most effective) stock trading strategy

Traders keep on looking for a holy grail to jump in and out of stocks ,currencies , commodities and so on , but they ignore the simplest and most reliable strategy – the old , classic moving average crossover .

Moving average crossover indicate change in the trend , support , resistance and indicate non trending areas or consolidation – no other strategy can beat this .

All other indicators are prone to give false signals , but moving averages being the mathematical calculation of most simplest nature with no assumptions ( remember Occam’s razor – the solution with least no. of assumption is the best solution ) are the most reliable .

You can just put up moving average crossover on any chart of any financial instrument in any era , and you would come up with same result – and that is as close to holy grail as it can be .

The only caveat , I have observed is that it should be applied to higher timeframes like Daily or Weekly chart where it is most reliable .

So let’s see some examples :

It is quite obvious that you could have gone long , without any superfluous indicators or any complicated analysis .

There are times , when it can give you whipsaws , but then if you observe , whipsaws occur when the crossovers are very close or moving averages are close to each other , where you can take advantage of MACD.

This technique can not only be applied to trading , but investing as well — just buy stocks when the crossover happens and if you like buy and hold , keep on holding it as long as you wish based on your analysis .

Technical analysis if often looked down upon , but this stuff of moving average crossover can indicate the correct timing which can make a huge difference to your stock purchases.

There are critics of crossover who say it produces false signals , but tell me one strategy which is right 100% of the time …

You may say it is too simplistic … by Leonardo Da Vinci said ” Simplicity is the utmost sophistication ” — I couldn’t agree more .

Test this stuff yourself and let me know .

Ranjan