Dual Moving Average Trend Signals with Open-and-Close Confirmation

Summary

This document presents a trend-following approach using two moving averages with different lookback lengths. Its example uses 10- and 20-period averages, configurable as exponential or simple. A long signal occurs when both the current bar’s open and close are above both averages; a short signal occurs when both are below. The strategy closes a position when the opposite condition appears. Although the explanation refers to moving-average crossovers, the provided entry rules rely on price relative to both averages rather than a crossover between the averages themselves.

The document argues that the shorter average responds more quickly and the longer one filters some noise, while open-and-close confirmation may reduce weak signals. It also notes whipsaw risk, frequent reversals, and the possibility of overfitting during parameter selection. Published settings identify a BTC/USDT futures backtest spanning roughly a year, but the document provides no results or performance measures. It suggests evaluating parameters, adding stops, and applying signal filters; these are proposals rather than tested findings.

Key ideas

• The example uses two moving averages, with configurable periods and simple or exponential types.
• A long signal requires the bar’s open and close to exceed both averages; a short signal requires both to fall below them.
• The position closes when the opposing price condition appears.
• Whipsaws and overfitting are stated risks, and the published backtest settings include no performance results.

Tags

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