Dual SMA Trend Entries with a Rising Trailing Stop
Summary
This strategy uses a fast and slow simple moving average crossover to enter long positions: it buys when the fast average crosses above the slow one. It closes on a bearish crossover unless trailing exits are enabled, in which case a stop follows rising prices and can close the position on a pullback. The stop is recalculated at each bar close using a percentage deviation and is constrained to move upward, never downward. A market order is used to exit when the selected price source crosses below the stop.
The document describes configurable average lengths, a trailing deviation, and a price source for checking the exit. It reports no quantified performance evidence; its qualitative claim of good backtest results is limited to unspecified training data and comes without supporting statistics. Risks include false crossover signals, premature exits from a tight trail, and gaps through the stop. The method is presented for long trades, and results will depend on parameter choices, market conditions, execution, and position sizing.
Key ideas
- A fast SMA crossing above a slow SMA triggers a long entry.
- A bearish crossover provides the direct exit signal when trailing is disabled.
- With trailing enabled, the stop is based on a percentage below price and may only rise.
- A price pullback through the stop triggers a market exit.
- False crossovers, tight trailing settings, and price gaps can undermine results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.