Adaptive EMA Pullback Entries with Candle Confirmation and ATR Stops

Summary

This strategy combines a custom adaptive EMA with conventional short and long EMAs to identify trend direction and pullback entries. Its dynamic average adjusts its smoothing according to price level and the recent size of price changes, with faster response when the calculated acceleration factor rises. Long signals require price above the adaptive average, a short EMA above a long EMA, a return within a specified percentage of the adaptive average, and a three-candle bullish pattern. Short signals apply the corresponding bearish conditions.

The script sets stops using a multiple of ATR and profit targets using a fixed percentage. It exposes parameters for the averages, pullback distance, ATR, and speed thresholds, but supplies no backtest results or evidence that the approach is profitable. The default speed thresholds are extremely large in price units, so their usefulness depends on the instrument and chart scale. The document also does not describe position sizing beyond allocating the strategy's default order quantity as a percentage of equity, or discuss execution costs and robustness across markets.

Key ideas

• The adaptive EMA changes its smoothing based on normalized price movement and recent movement size.
• Long and short entries require both EMA alignment and price position relative to the adaptive average.
• A three-candle reversal pattern and a return near the adaptive average are used to time entries.
• Exits combine an ATR-based stop with a fixed-percentage target.
• The script provides no performance evidence, and its speed thresholds may need instrument-specific calibration.

Tags

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