A lot of people trading stocks stare at a bunch of moving averages—5-day, 10-day, 60-day, all on the chart—only to get more and more confused. In reality, it doesn’t have to be so complicated. For swing trading, just one line is enough—the 20-day moving average.

**Why the 20-day line?**

There are about 20 trading days in a month, so this line reflects the average cost over the past month. It doesn’t jump around like short-term moving averages, nor is it as sluggish as long-term ones. It sits right in the middle, making it the best for catching swings.

A single day’s ups or downs won’t affect it much. As long as the price doesn’t fall below this line, there’s no need to panic about short-term corrections. Plus, it’s simple to use—just glance at it a couple of times a week. Even those with a day job can follow it.

**Three Key Signals**

**How to spot a buy:** When the stock price rises from a low and closes above the 20-day line for two consecutive days, and the line itself starts to slope upward (turning up after being flat or downward), that’s a solid time to get in. If it later pulls back near the moving average on low volume and stabilizes, consider adding more.

**How to decide to hold:** As long as the price stays above the 20-day line and the line keeps trending up—with only occasional small pullbacks that don’t break the line—just hold your position. Only consider trimming if the price gets too far ahead or trading volume drops sharply, then wait for a pullback.

**When to sell:** There are two situations where you must exit: one, the price closes below the 20-day line for two days in a row, or drops more than 3% in one day and breaks the line; two, the moving average turns downward. No matter if you’ve made enough profit or not, you have to get out then. Especially in a downtrend, if the price rebounds to the line but can’t hold above it, that’s your chance to escape.

**Three Pitfalls to Avoid**

Don’t blindly wait for golden crosses or death crosses. Many golden crosses during a downtrend are just fake-outs, and death crosses during an uptrend may just be shakeouts.

Always combine with volume analysis. A real breakout needs to happen on strong volume, while a low-volume pullback means there’s support; if you see a strong-volume breakdown, get out fast.

Don’t trade much in choppy markets. If the price keeps crossing the moving average back and forth and the line is flat, that’s a sign to stay on the sidelines—don’t get whipsawed by frequent trades.

To put it simply, this line is like a ruler. If the price is above it and the line is rising, follow it; if the price breaks below or the line turns down, get out. Don’t make trading complicated—simple often works best.