SMA (Simple Moving Average) Strategy

Overview

The SMA strategy uses crossovers of short-term and long-term simple moving averages to identify trend changes and generate trading signals.

How It Works

Compares two SMAs: - Short SMA: Faster, more responsive (e.g., 50-day) - Long SMA: Slower, smoother (e.g., 200-day)

Trading Signals

Buy Signal (Golden Cross)

Short SMA crosses above long SMA.

Sell Signal (Death Cross)

Short SMA crosses below long SMA.

Usage Example

stock = SQA::Stock.new(ticker: 'AAPL')
prices = stock.df["adj_close_price"].to_a

sma_short = SQAI.sma(prices, period: 50)
sma_long = SQAI.sma(prices, period: 200)

vector = OpenStruct.new(
  sma_short: sma_short,
  sma_long: sma_long
)

signal = SQA::Strategy::SMA.trade(vector)

Characteristics

• Complexity: Low
• Best Market: Trending
• Win Rate: 45-55%

Strengths

✅ Simple and reliable
✅ Filters market noise
✅ Identifies major trends

Weaknesses

❌ Significant lag
❌ Late entry/exit
❌ Poor in ranging markets