A TEMA-DEMA Crossover with HMA Trend Filtering

Summary

This strategy combines three moving averages with different roles. TEMA and DEMA provide the crossover signal: a bullish crossover can open a long position, and a bearish crossover can open a short position. HMA acts as a longer-term direction filter, allowing entries only when its recent slope agrees with the signal. The source includes configurable periods and illustrates the method in a charting-platform strategy script.

The document lists lag, parameter sensitivity, and potentially unnecessary reversals among the risks. It proposes testing different period settings and considering stop-loss or trailing-stop rules, but supplies no backtest results or evidence that the filter improves returns or drawdowns. Its claims that combining averages improves accuracy or reduces drawdown are presented as rationale, not demonstrated findings. The setup is therefore a configurable trend-following example whose behavior depends on the instrument, timeframe, parameter choices, and execution assumptions.

Key ideas

• TEMA and DEMA crossovers provide the short- and medium-term directional entry signal.
• HMA slope filters entries so that trades align with the longer-term direction.
• The example supports adjustable periods for all three moving averages.
• The document identifies lag and multi-parameter tuning as key limitations.
• No performance evidence is provided to show that the combined filter improves results.

Tags

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