Dual Moving Average Trend Entries and Oversold Short Signals
Summary
This system combines trend following with an oversold short setup. It uses 100- and 500-period moving averages to frame the market direction, with optional RSI, ADX, and ATR filters for long entries. Shorts require price below both averages and the lower Bollinger Band, an RSI reading below a threshold, and a check that blocks entries when the moving-average gap indicates a strong uptrend.
Exits differ by direction: longs use a percentage stop and can also close below the longer average; shorts use a percentage stop and a fixed percentage profit target. The described defaults use all account funds per trade and permit one pyramid addition, creating substantial exposure. The document provides design details and risks, but no backtest results or evidence of profitability. It warns of lag, parameter sensitivity, poor behavior in sideways or transitional markets, liquidity and gap risks, and recommends testing robustly and sizing positions cautiously.
Key ideas
- The 100- and 500-period moving averages establish the broad trend context.
- Long entries can require momentum, trend-strength, and volatility confirmation.
- Short entries combine downside trend alignment with oversold conditions and an uptrend block.
- Long and short trades use different exit rules, including percentage stops.
- The default full-account allocation and permitted pyramid addition can magnify drawdowns.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.