EMA Crossover with an ATR Trailing Stop and Fixed Profit Target

Summary

This long-only trend-following strategy enters when a fast EMA crosses above a slow EMA. Its default averages are 5 and 200 periods, with a 14-period ATR used to set a stop below the current close. The stop distance is two ATR by default, while a fixed profit target is set five percent above the average entry price. The document describes the ATR stop as trailing because it is recalculated as prices change, and positions are intended to close when either exit level is reached.

The approach offers simple, systematic entry and exit rules, but the document notes that sideways markets can produce false crossover signals, reversals can cause drawdowns, and volatile execution can introduce slippage. It also cautions that parameters and fixed position sizing may not suit every market. The published settings specify a daily ETH/USDT spot-market test from February 2024 to February 2025, but provide no reported results. In the source, the stop is computed regardless of whether it rises monotonically, and the profit target variable is reset while flat, so execution details merit careful validation before interpreting the described behavior.

Key ideas

• A long entry is triggered by the fast EMA crossing above the slow EMA.
• The default ATR stop distance is two ATR below the current close, and the stated fixed target is five percent above entry.
• The strategy is long-only and does not describe a short entry rule.
• Range-bound conditions, reversals, slippage, and parameter sensitivity are identified as risks.
• The backtest settings specify a market and date range but include no performance results.

Tags

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