Combining EMA Direction with Displaced Three-Line Moving Average Signals

Summary

This strategy combines two directional signals: an EMA-based rule that compares recent highs and lows with an exponential average, and a three-line system using simple averages of median price. The three averages use configurable lengths and offsets, with defaults of 13, 8, and 5 periods and displacements of 8, 5, and 3. A long signal requires both components to indicate upward direction; a short signal requires both to indicate downward direction. A reverse option swaps those directions.

The strategy enters long or short on the combined signal and closes all positions when the signal is neutral. It also has a configurable start date and colors bars by the resulting direction. The source explains the indicator construction and decision logic, but provides no performance statistics, exits based on risk, or evidence that the defaults work across markets or timeframes. The title’s “2/20” label is not reflected by the code’s default EMA length, which is 14.

Key ideas

• The strategy requires agreement between an EMA-based directional rule and a displaced three-average arrangement.
• The three averages use median price and configurable lengths and offsets.
• A reverse setting switches long and short signal directions.
• Neutral combined signals close all open positions.
• The document presents signal logic but no performance evidence or dedicated risk controls.

Tags

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