EMA Band Trend Following with Exhaustion Exits and Counter-Trend Trades
Summary
This strategy follows trends using EMA bands calculated from candle highs and lows. It enters long when price breaks above the high EMA band and short when price breaks below the low band, then ordinarily exits after price crosses the opposite band. A second EMA can filter trades, and the settings allow re-entry after price returns to the middle bands.
Optional early exits look for time spent inside the bands, Leledc price-action signals, Bollinger Band exhaustion with RSI conditions, or failure back inside EMA-based buy and sell zones. Counter-trend entries can use Leledc or Bollinger signals beyond those zones; the author describes both quick mean-reversion trades and attempts to catch new trends early. These options increase flexibility but require careful testing: the document warns that counter-trend positions can sustain large losses without stops, and that early exits may lower net profit while improving win rate or Sharpe ratio. The author reports observations from personal testing but supplies no specific backtest results, and does not guarantee that the script is free of errors or repainting.
Key ideas
- EMA bands based on candle highs and lows define trend breakouts and opposite-band exits.
- A second EMA can filter entries, while a return into the middle bands can support re-entry.
- Optional exits use time inside the bands, Leledc bars, Bollinger exhaustion, or EMA-based zones.
- Counter-trend entries aim either for short mean-reversion trades or for early participation in a potential trend.
- Counter-trend positions carry substantial risk without stops, and configurable exits require testing.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.