EMA Crossover Trend Following with SMA Stops and Re-Entry

Summary

This trend-following system uses the crossover of a shorter and longer exponential moving average to initiate long or short positions. A simple moving average acts as a stop for long trades; after a stop, the rules allow a long re-entry when price recrosses the longer EMA or a short entry after another bearish EMA crossover. The described implementation also specifies commission and slippage assumptions.

The document identifies sideways-market whipsaws, moving-average lag, repeated stop-outs during volatile conditions, and the absence of a detailed position-sizing method as limitations. It suggests volatility-adjusted stops, position sizing, signal filters, and adaptive periods for further study. Published settings identify a one-hour SOL market backtest spanning roughly a year, but the document provides no performance statistics. The stated logic also focuses its explicit SMA stop on long positions, so the short-side risk handling is not fully described.

Key ideas

• EMA crossovers provide the initial long and short signals.
• A close below the longer-period SMA exits a long position.
• After a stop, a price recross above the longer EMA can trigger a long re-entry.
• The rules are vulnerable to lag and repeated false signals in choppy or volatile markets.
• The published test setup includes trading costs but reports no outcomes.

Tags

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