Which Moving Average Should You Use to Trade? The Case for a 50-Day and a 150-Day

Every momentum and swing article mentions moving averages. Few explain what they actually are, why traders use two of them, and which ones matter. Here's the plain-language version — and why the pair beats any single number.

Illustration coming soon

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vector illustration: two rising trend lines (one fast, one slow) running beneath a steady price line, clearly labeled "50-day" and "150-day," like two rails the price rides on. Clean, calm, no tickers.

The tool every momentum article leans on

Open any guide to momentum or swing trading and you'll hit moving averages early. "Hold above the 50-day." "Bounce off the 150-day." "Break of the 200-day." They sound like rules handed down from a charting oracle — and that's exactly why they confuse people. The rules feel random, so beginners either ignore the averages entirely or bolt on a single magic number and get whipsawed.

Neither outcome is necessary. A moving average is a simple thing, with a job that's easy to say in one line: it smooths price so you can see the trend. This article explains the tool from the ground up, why momentum and swing traders almost always use two of them, and how to read the pair without turning it into superstition.

What a moving average actually is

A moving average is just the average price over a rolling window, drawn as a line on the chart. The "50-day MA" is the average of the last 50 closing prices, recalculated each day as the window rolls forward. From one trading day to the next it moves slowly, because one new day only nudges a 50-day average, and barely touches a 200-day one.

That slowness is the entire point. Raw price jumps around — up 3% one day, down 2% the next, with gaps and noise and news. The moving average filters most of that out and leaves you with the underlying tendency: is this thing generally drifting up, down, or going nowhere? A single average answers three useful questions:

• Is price above or below the average? Above suggests the recent trend is up relative to its own history; below, down.
• Is the average itself rising or falling? A rising average means the trend is genuinely building; a flat or falling one means the move has stalled or reversed.
• How far is price from the average? Far above can signal an extended stretch; pulled back to it can be a resting point in a living trend.

That's the whole mechanism. Nothing predicts the future; it simply describes, in a smoothed way, what price has been doing.

Why you rarely want just one

If one average smooths price, wouldn't the smoothest one be the best? Not quite. A single moving average is a compromise: a fast one (say the 20-day) reacts quickly but whipsaws in noise, while a slow one (the 200-day) is smooth and reliable but lags badly — by the time it confirms a big move, much of it is over.

That's why momentum and swing traders almost always work with two: one short enough to describe the current trend, and one long enough to describe the trend that matters. The site's own convention, used throughout its research and this series, is the 50-day for the medium-term trend and the 150-day for the long-term trend. (You'll also commonly hear the 200-day, which plays the same "long-term" role — the principle is identical, and the choice between 150 and 200 is one of style more than substance.)

The pairing works because the two averages answer different questions:

• The 50-day is the "what's working right now" line. It's your fast reference for the current trend and the first line a pullback tends to touch.
• The 150-day is the "is the whole story still intact" line. It's your long-term trend measure — the level below which the trend itself looks broken, and the deeper support a healthy trend revisits only occasionally.

Together they give you a brake and a gas pedal: the short one for timing within the trend, the long one for deciding whether the trend is worth trading at all.

Reading the pair: what a healthy trend looks like

The cleanest way to read two moving averages is to step back and look at their shape as a pair rather than chasing their crossings day to day. A healthy, tradeable uptrend has a signature:

• Price sits above both averages. Not glued to them, but above — riding above the rising path of its own history.
• The averages are stacked, the faster one above the slower one, and both are rising. That's momentum cooperating with structure: the current trend and the long-term trend are pulling in the same direction.
• Pullbacks find support near the averages, especially the 50-day, and the price resumes upward. That orderly dipping-and-rising is what tells you institutions are still buying — not just that price once went up.

You can think of the two rising averages as rails. When price is above a rising 50-day, which is itself above a rising 150-day, the train is on the tracks. When those relations break down — price losing one average, an average flattening and rolling over, the stack collapsing — the tracks are gone, and it's time to stop assuming the trend is alive.

Structure first, crossovers second

Here's a common trap that moving averages tempt people into. Because the lines cross each other, beginners assume the crossing is a buy or sell signal. When the 50-day crosses above the 150-day, some call it a "golden cross" and consider it bullish; the reverse is a "death cross" and bearish.

There's a kernel of truth — a sustained cross is often a milestone in a real trend change. But as a trigger, it's late and lagging. A crossover tells you a change has already happened in the averaged history, not that a change is about to happen. By the time the long average confirms, the sharpest part of the move is frequently over, and you're buying near a false-fresh break or selling near a bottom built on the news everyone already knows.

The more robust way to use moving averages in momentum and swing work is as context for structure, not as a standalone signal:

• Fading a leveled market. When both averages flatten and price chops around them, the market is telling you there's no tradable trend. The disciplined answer is often to stand down, not to grab at crossovers.
• Treating the averages as reference points. "Enter on a pullback to the rising 50-day," "place risk below the recent low or the 150-day," "a close decisively below the long average changes the idea." These use the lines as a map of support and invalidation — not as a christmas tree that flashes buy and sell.

That one mental shift — from "the lines tell me when to buy" to "the lines show me where the trend is and where it breaks" — is the difference between using the tool and being used by it.

Applying the same map to ETFs

Moving-average structure isn't only for single stocks. It may be even more natural for ETFs, for two reasons.

First, a basket's chart is smoother than any single stock in it. One company's surprise quarter barely moves a diversified fund, so the 50- and 150-day lines are cleaner and less prone to noise-driven whipsaws. The averages mean what they say, more often.

Second, the ETF world is a rotation game: the recurring question is which sectors, themes, or regions are leading this cycle — and the 50/150 pair is a tidy way to compare them. A fund trading above a rising 150-day with price pulling back toward a rising 50-day is a candidate within a living trend. A fund under a falling long average is telling you that leadership has passed, however attractive the recent dip looks.

The hedge is the same one from single stocks: trend first, entry second. Establish that the basket is genuinely above a rising long-term average before timing a pullback, and check whether its relative strength still supports it — a fund can be rising in absolute terms while quietly losing ground to the leaders around it.

Putting the pair to work with Relaxfolio

This is exactly the kind of structure Relaxfolio surfaces in plain English, across thousands of US-listed stocks and ETFs. Instead of eyeballing hundreds of charts for the right average shape, ask a research question and review what comes back:

• "New up trends" — stocks moving above long-term trend measures, flagging exactly the moment a name reclaims its rising long average for further review.
• "Pullbacks" — uptrending stocks that have dipped back toward established support (their moving averages), with how far each sits from its trend measure shown in the results.
• "Trending stocks" or "ETF pullbacks" — a ranked, grouped view of the leaders so you can spot rotation, not just single names.

Open any single name from a screen and its multi-year chart shows the 50- and 150-day moving averages overlaid — the pair this article describes, drawn for you. Review how price sits relative to both lines, whether they're stacked and rising, and where the natural support and invalidation sit, then decide for yourself. Screens can be saved for ongoing review, with updated results delivered by email. The tool shows you the map; the judgment about the trend, the entry, and the risk remains yours.

A moving-average checklist

Before you treat a moving average as a reason to act, run through six questions:

1. Is price actually above a rising long-term average — not just taking a breather near a flat line?
2. Are the 50- and 150-day averages stacked and rising, or flattened and confused?
3. Am I reading the averages as context for structure, not chasing a crossover as a magic signal?
4. Is a pullback to support happening within a clear uptrend, or is the long-term trend itself degrading?
5. Have I defined what a broken trend looks like — a decisive close below the long average — before entering?
6. For an ETF, does relative strength still support this sector or theme, or is leadership quietly rotating away?

Six considered answers will beat any lucky crossover. Moving averages won't tell you the future — but read as a pair, they give you something more useful: a clear, current map of whether a trend exists, where it's resting, and exactly where it breaks. And a map, not a magic number, is what disciplined momentum and swing trading is built on.

Continue the momentum series: Momentum Investing 101, How to Find Breakout Stocks Before They Run, and Riding the Trend: Buying Pullbacks and Knowing When to Sell.

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To see trend structure applied across the market, ask Relaxfolio for "new up trends" or "pullbacks" and review the 50- and 150-day context behind each name. Explore momentum research → · Open Relaxfolio →

This article is for educational purposes only and is not investment advice. All investing involves risk, including possible loss of principal.