The Triangular Moving Average (TMA) Strategy is a technical trading approach that smooths out price action more effectively than traditional moving averages. By applying weighted averaging to both the beginning and end of a data series, the TMA centres its values—making it ideal for identifying longer-term trends, entry zones, and mean reversion setups.

This strategy is particularly useful for swing and position traders looking for clear direction in trending markets or well-timed reversion trades in ranging conditions.

What Is a Triangular Moving Average?

The Triangular Moving Average is a double-smoothed simple moving average, giving more weight to mid-period prices than to the most recent or oldest prices.

Key Features:

• Smooths price better than EMA or SMA
• Reduces whipsaws in choppy markets
• Ideal for trend confirmation and entry filters

It lags more than the EMA, but it provides strong confirmation signals with fewer false alerts.

Strategy Objective

• Use the TMA to define trend bias
• Trade in the direction of the trend when price pulls back to the TMA
• Use structure and price action to time entries and exits

Indicators and Tools

• Triangular Moving Average (TMA) – Periods: 20 or 50
• Price Action (candlestick confirmation)
• Optional: RSI (14) or MACD for extra confirmation
• Optional: Support/resistance or trendlines for confluence

Step-by-Step Strategy Guide

Step 1: Determine Trend Direction

• Apply the TMA to your chart (M15, H1, or H4 for best results)
• If price is consistently above the TMA, the trend is bullish
• If price is consistently below the TMA, the trend is bearish

Step 2: Wait for Price Pullback to the TMA

• In a bullish trend: Wait for price to pull back to the TMA without breaking below it
• In a bearish trend: Wait for price to retrace to the TMA without breaking above

Step 3: Look for Entry Confirmation

• At the TMA zone, wait for a candlestick signal:
  • Bullish engulfing
  • Pin bar rejection
  • Inside bar breakout
  • Break of minor trendline
• Optional: Confirm with RSI divergence or MACD crossover

Step 4: Enter and Manage Trade

• Entry: After confirmation candle closes near the TMA
• Stop Loss:
  • Just below the swing low (bullish) or above swing high (bearish)
  • Or 1.5x ATR for volatility protection
• Take Profit:
  • Nearest structural high/low
  • 2:1 reward-to-risk
  • Or use trailing stop if trend remains strong

Example: GBP/JPY H1 Bullish Setup

• TMA (20) shows upward slope, price pulls back from 186.80 to 186.20
• Bullish engulfing candle prints on TMA
• Entry: 186.35
• SL: 185.90
• TP: 187.50
• Reward-to-risk = 2.5:1

Alternative Setup: Mean Reversion Strategy

• If market is ranging and TMA is flat, use it as a mean reversion line
• Buy when price moves far below TMA and returns
• Sell when price spikes above TMA and reverses

This works well on M15 or H1 during quiet market phases.

Best Market Conditions

• Trending markets for continuation setups
• Range-bound markets for mean reversion trades
• Liquid instruments like EUR/USD, NAS100, Gold, and GBP/JPY
• Avoid trading during low-volume hours or around major news events

Advantages of the Strategy

• TMA filters noise and gives clear trend bias
• Excellent for structured pullback entries
• Works on all timeframes and assets
• Can be used as trend or mean-reversion tool
• Reduces false signals compared to EMA/SMA

Common Mistakes to Avoid

• Trading against the TMA slope without confirmation
• Ignoring candlestick or price structure at entry
• Using too short a TMA period (increases lag sensitivity)
• Chasing price far from the TMA without a pullback

Conclusion

The Triangular Moving Average Strategy is a versatile, reliable method that adapts well to both trend and range conditions. With its double-smoothed nature, the TMA helps traders stay on the right side of the market, reduce noise, and improve entry accuracy through price action confirmation.

To master TMA-based trading and combine it with advanced market structure and risk management techniques, enrol in our expert-led Trading Courses and refine your strategy with professional precision.