Dual SMA Crossovers with Risk-Based Sizing and Trailing Stops

Summary

This trend-following framework enters long when a fast simple moving average crosses above a slower one, and short when it crosses below. The described defaults use 24- and 48-period averages, with trades evaluated at candle close. Position size is intended to reflect a per-trade equity risk limit and stop distance. Trade management combines a fixed percentage stop, a risk-to-reward profit target, and a trailing stop that activates after a specified gain and follows favorable price movement.

The document explains the rule set and identifies common limitations: moving-average signals lag and can whipsaw in sideways markets, fixed parameters may not suit different instruments or volatility conditions, and gaps can prevent stops from filling as expected. It also notes that fees and slippage are not accounted for. No backtest performance results are supplied, so the suggested risk controls and parameter choices should not be read as evidence of profitability. The document recommends robustness checks and adaptive filters as possible areas for further evaluation.

Key ideas

• A fast and slow SMA crossover determines long and short direction.
• The described system evaluates signals at candle close and sizes positions using risk and stop distance.
• Fixed stops, a risk-to-reward target, and a profit-activated trailing stop manage exits.
• Lagging signals can produce whipsaws, while fixed settings may not fit every market.
• Gaps, fees, and slippage may make actual results differ from intended risk levels.

Tags

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