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One of the most basic technical signals when it comes to making a determination as to whether to buy or sell a stock or other investment can be found with a Triple Moving Average Crossover. Depending on the direction of the crossover, a buy or sell signal is generated and traders can make their trades accordingly.

Moving Average (MA) Defined Based on the average value of a security, a moving average considers past closing prices over a given period of time. Since the MA is be based on historical prices, the lagging data must not be used in isolation. The longer the moving average, the more lagging it will be; the shorter the period, the less lag. As a result of this lag, the triple moving average crossover works best in clear markets where there is a definite trend, and not so well in sideways or choppy markets.

Triple Moving Average Crossovers Defined As a technical indicator, the triple moving average crossover gives the trader an indication of the future direction of that security. It uses a short, medium, and long moving average and the signal is triggered when the short moving average crosses the medium, and the medium moving average crosses the long moving average. For most applications, analysts rely on 4-day, 9-day and 18-day moving averages for this indicator.

In this case, the 4-day would cross the 9-day and the 9-day would cross the 18-day. Since all three cross, a technical indicator is triggered and the investor is advised to make a trade.

Trade Signals From the Triple Moving Average Crossover Quite simply, a bullish signal is triggered when the three moving averages cross an upward sloping trendline, and a bearish signal is triggered when the averages cross a downward sloping trendline. When the crossover occurs, or is about to occur, the analyst will make a firm recommendation or a conditional recommendation to buy or sell.

Making decisions on current or prospective positions should rarely be based on a triple moving average crossover by itself. It is strongly recommended that analysts and investors confirm or refute the signal by reviewing the MACD (moving average convergence-divergence) and Momentum before entering or exiting a position based on technical indicators such as this.

Reviewing multiple technical data for multiple securities can become difficult at best without the mathematical expertise and manpower needed. As such many traders rely on software that will perform such calculations for them and simply advise as to whether they should buy or sell a particular security.