Moving Average Exits: Using MA Crosses and Pullbacks to Exit Trades
Learn two practical moving average exit methods—MA crosses and pullbacks. See clear rules, examples, trade-offs, and how to practice them safely.
Moving Average Exits in Plain English
A moving average (MA) is the average of recent prices, plotted to smooth short-term noise. An MA exit is a rule that closes a trade when price action changes relative to the MA. In practice, traders most often use two simple approaches: exits on an MA cross and exits on a pullback to a chosen MA.
If you need a quick primer on what MAs are and how they’re built, see Moving Average Simply Explained. Below, we focus only on exits—when to get out, not when to get in.
Method 1: MA Cross Exit
An MA cross uses two MAs: a faster MA (fewer periods) and a slower MA (more periods). The exit occurs when the fast MA crosses through the slow MA in the opposite direction of your trade.
How to apply
- Pick one MA type (simple or exponential) and keep it consistent.
- Choose a fast MA and a slow MA (for example, fast 9–20, slow 21–50).
- For long trades: exit when the fast MA crosses below the slow MA. For shorts: exit when the fast crosses above the slow.
- Decide whether you require the bar to close after the cross to avoid intrabar whipsaws.
Example
You’re long in an uptrend while the fast MA stays above the slow MA. After a series of lower highs, the fast MA rolls over and crosses below the slow MA. You exit, giving back some profit but protecting yourself if the trend is reversing.
Pros and cons
- Pros: Simple and objective; keeps you in winners during sustained trends.
- Cons: Often exits late; vulnerable to whipsaws in choppy conditions.
Method 2: Pullback to MA Exit
A pullback exit uses a single MA as a dynamic line in the sand. You exit when price violates the MA or fails to bounce from it.
How to apply
- Pick one MA aligned with your timeframe (e.g., a medium-length MA that price respects).
- For long trades: exit on a confirmed close below the MA, or after a failed bounce into the MA that makes a lower high.
- For shorts: exit on a close above the MA, or after a failed drop from the MA that makes a higher low.
- Option: take partial profits on the first MA touch; fully exit on a confirmation close through the MA.
Example
You’re long in a steady up move where pullbacks often tag the MA and bounce. Price pulls back, touches the MA, but this time closes below it the next bar. You exit, accepting that the rhythm may have changed.
Pros and cons
- Pros: Quicker to lock in gains; adapts to trend rhythm; fewer late exits.
- Cons: More early exits during strong trends; can cut big winners short.
Choosing, Testing, and Practicing Your Exit
| Method | Best for | Main trade-off |
|---|---|---|
| MA Cross Exit | Sustained, smoother trends | Later exit, fewer false signals |
| Pullback to MA Exit | Rhythmic pullback-and-bounce trends | Earlier exit, more sensitivity |
Settings and execution details
- Timeframe fit: shorter MAs often suit intraday; slightly longer MAs suit swing. Match MA length to how quickly you want to react.
- Confirmation: decide “close-based” vs “intrabar” triggers before you start. Changing mid-trade skews results.
- Consistency: stick to one MA type and lengths across your testing so your data is comparable.
Common mistakes
- Mixing rules: switching between cross and pullback rules during a trade.
- Over-optimizing: curve-fitting MA lengths to a few charts, then seeing them fail elsewhere.
- Ignoring context: if price is clearly range-bound, MA exits will trigger more often—size down or adapt expectations.
The best exit is the one you can execute repeatedly. Pick one method, define exact rules, and practice across many charts to see how it performs in different market conditions.
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