EMA Crossover Rules for Long and Short Trend Following

Summary

This document describes a two moving average strategy that uses a fast EMA and a slow EMA to identify directional changes. A crossover of the fast line above the slow line opens a long position, while a cross below opens a short position. Positions close when the relationship between the averages reverses. The example uses 12 and 21 period EMAs and sets default trade size to 10% of equity.

The document provides implementation logic but no performance results, market comparison, or evidence that the rules are profitable. EMA crossovers can respond late to reversals and produce repeated signals in sideways markets. The stated sizing rule does not define a stop loss, maximum portfolio exposure, or other loss controls. Its broad claims about use across timeframes and assets are not supported by testing details, so traders would need to evaluate costs, execution assumptions, and risk on the intended market before relying on it.

Key ideas

• A fast EMA crossing above a slow EMA triggers a long entry.
• A fast EMA crossing below a slow EMA triggers a short entry.
• The opposite EMA relationship closes an existing position.
• The example sets default position size to 10% of equity.
• The document gives no backtest evidence or explicit stop loss rules.

Tags

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