DMI and EMA Filters for Trend-Following Entries and Exits

Summary

This trend-following strategy combines the directional movement indicators DI+ and DI− with ADX strength thresholds and an EMA price filter. It opens long positions when DI+ crosses above DI−, ADX clears a threshold, and price is above the EMA; short entries use the opposite directional conditions. Separate DI crossovers with a higher ADX threshold close open positions.

The document gives indicator defaults and published BTC/USDT futures backtest settings, but no performance measurements. It argues that combining directional signals, trend strength, and an EMA may filter weaker moves, while acknowledging that strict criteria can reduce trade frequency and volatile swings can trigger repeated stops. The implementation's state flags also constrain entries and exits, so actual behavior depends on their interaction with crossover signals. Parameter tuning and additional filters are proposed, but their effectiveness is not demonstrated.

Key ideas

• DI crossovers establish direction, while ADX thresholds filter for stronger moves.
• An EMA condition confirms price direction before entries.
• Opposing DI crossovers paired with a higher ADX threshold close positions.
• The document gives BTC/USDT futures backtest settings but reports no performance results.
• Strict thresholds may reduce trading frequency, and choppy markets can cause repeated exits.

Tags

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