Dual Simple Moving Average Crossovers for Trend Signals

Summary

This document describes a trend-following approach based on the crossover of a short-period and a long-period simple moving average. The specified defaults are 9 and 21 periods: crossing above the longer average signals a long entry, and crossing below signals a close. It also discusses sizing trades in relation to capital and a risk percentage, though the included script calculates a position size that is not used in its order quantity, which is fixed at one unit.

The discussion presents the method as straightforward and potentially useful across markets, while noting that moving averages lag and can produce repeated losses in ranging conditions or around reversals. It also flags slippage, extreme events, and parameter overfitting. Published test settings describe BTC/USDT futures on an hourly chart for about a month, but no results or performance evidence are supplied. Suggested extensions include signal confirmation, stop levels, and volatility-aware sizing; these are proposals rather than tested improvements.

Key ideas

• A short simple moving average crossing above a longer one signals a long entry.
• A downward crossover closes the long position in the included script.
• The stated default average lengths are 9 and 21 periods.
• The described risk-based sizing calculation does not determine the script's fixed order quantity.
• Ranging markets, lag, slippage, extreme moves, and overfitting are identified as risks.

Tags

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