A Trend-Filtered Moving Average System Using High and Low Prices
Summary
This trading indicator description adapts a method associated with Larry Williams by adding a trend moving average to determine trade direction. It plots the indicator in a separate window after normalizing price by the trend average. Separate short-period moving averages of highs and lows provide the entry and exit levels, while the trend average is displayed around a zero line to signal direction.
The rules are to trade only with the indicated trend: buy when price reaches the low-based average during an uptrend and close at the high-based average; sell at the high-based average during a downtrend and cover at the low-based average. The document gives operational rules but no market, timeframe, parameter evaluation, backtest, or performance evidence. It also does not specify how to manage gaps, transaction costs, position size, or ambiguous signals, so the description alone is insufficient to assess profitability or robustness.
Key ideas
- A trend moving average filters whether the system may take long or short trades.
- Short-period averages of highs and lows define the described entry and exit levels.
- Long entries use the low-based average and exit at the high-based average during an uptrend.
- Short entries use the high-based average and cover at the low-based average during a downtrend.
- The document provides rules but no performance tests or trading cost analysis.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.