200 Day Moving Average Trading Strategy – (With Backtest)

The 200-day moving average trading strategy is frequently used as an indicator in the financial markets. Who hasn’t heard about the “Death Cross”, “support at the moving averages”, “the trend is positive because the price is above the averages”, etc.?  Among the moving averages, the 200-day moving average is probably the most used and referred to.

This article looks at the 200 day moving average and how it works, why it works, and additionally why it sometimes doesn’t work. We present a 200-day moving average strategy and the simple 200-day moving average rule. Also a couple of quotes by Paul Tudor Jones about the 200 day MA.

The main advantages of the 200-day moving average are simplicity, riding the trend, and playing defense. However, without a recession and falling prices, you are unlikely to beat buy-and-hold because of the many whipsaws.  As with most things in life, the 200-day moving average comes with both pros and cons. The 200-day moving average strategy is no silver bullet.

Included in this article are some 200-day moving average trading strategies and rules.

Let’s start with a short primer on what a moving average is: