EMA Crossover Trend Strategy with ADX Filtering and Candle-Based Trailing Stops

Summary

This trend-following system uses the relationship between closing price and an exponential moving average to set direction, while the Average Directional Index filters for trend strength. Long or short entries are considered when price is above or below the EMA and ADX exceeds a chosen threshold. The described defaults use a 50-period EMA and an ADX threshold of 20. A candle-based trailing exit begins after four consecutive profitable candles; its level then follows favorable closing prices and exits if price crosses back through it.

The document includes a Pine Script strategy and published daily BTC/USDT futures backtest settings covering late 2019 through early 2025, but reports no performance statistics or results. The code checks price relative to the EMA on each bar rather than requiring a fresh crossover, so repeated qualifying bars may affect entries. The trailing level is based on closes, not a volatility-scaled stop, and gaps, parameter sensitivity, and choppy markets remain concerns. The write-up recommends further testing and additional filters; it does not establish live profitability.

Key ideas

• The system uses price relative to an EMA to choose long or short direction.
• ADX above a threshold acts as a filter for trend strength.
• A trailing exit is activated after four consecutive profitable candles and follows favorable closes.
• The included backtest configuration does not provide performance results.
• Choppy conditions, sudden reversals, and stop execution gaps can undermine the approach.

Tags

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