200 EMA Distance Entries with Mean-Reversion Exits

Summary

This strategy uses the distance between price and a 200-period exponential moving average (EMA) to trigger trades. It enters long when price is below the EMA by at least a threshold and the latest candle is bullish, and enters short when price is above the EMA by that distance and the candle is bearish. The stated threshold is 0.75 percent. Positions exit when price returns to the EMA, reaches a profit target, or the trading day ends; a 20% stop loss based on option premium is also described.

The source and published settings show a Binance BTC/USDT futures backtest over a short period, but the document reports no performance results. Its explanation calls the approach trend following, although entries against the EMA and exits on a return to it resemble mean reversion. The source also expresses the profit target as 1.5 times entry price, which is ambiguous for short positions, and its exit logic does not clearly implement the stated premium-based stop. The results therefore cannot establish effectiveness or clarify these implementation details.

Key ideas

• The strategy calculates price deviation from a 200-period EMA and compares it with a threshold.
• A bullish candle below the EMA can trigger a long, while a bearish candle above it can trigger a short.
• The described exits include a return to the EMA, a profit target, and end of day.
• The entry direction conflicts with the document’s trend-following characterization and instead suggests mean reversion.
• The published backtest settings provide no performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.