EMA Crossover Trend Following with Retest Entries and Fixed Risk Limits

Summary

This trend-following system uses a fast and slow exponential moving average to set directional bias, then waits for price to return near the fast average before entering. The accompanying description gives periods of 200 and 800 for the averages, a 0.2% retest tolerance, a 0.5% stop, a 4:1 reward-to-risk target, and a limit of two trades per day. The script, however, sets the slow average to 500, so the stated design and code differ. Entries can be long or short according to the current crossover-defined trend, with exits set through stop and limit orders.

The document supplies a short TRX/USD futures backtest window but reports no performance metrics, so it does not establish profitability. It identifies lag from long averages, false crossovers in ranging markets, repeated triggers near the average, and the inflexibility of fixed stops as risks. Suggested extensions include volatility-based parameters, volume or trend-strength filters, multiple timeframes, and partial profit taking.

Key ideas

• EMA crossovers establish the directional bias, while retests of the fast average trigger entries.
• The description specifies 200- and 800-period averages, but the script uses 200 and 500.
• The strategy sets percentage stops and targets and limits the number of trades per day.
• The brief backtest settings contain no performance results, so they do not validate the strategy’s claims.

Tags

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