EMA Trend and Candlestick Signals with Risk-Based Position Sizing

Summary

This strategy combines EMA trend direction, candlestick shapes, rolling support and resistance, and risk-based sizing. It defines trend using the relative positions of the 20- and 90-period EMAs. In an uptrend, a bullish candle with a sufficiently long lower shadow can qualify as a signal; in a downtrend, a bearish candle with a long upper shadow can qualify. The document also describes checking recent highs and lows for breakouts, applying percentage stops, and requiring profit and risk-reward thresholds before taking profits.

The stated risk controls include risking 2.5% per trade, a 2.5% stop distance, and different minimum profit thresholds for long and short trades. These rules are not evidence of performance: no results are supplied, and the source is truncated. The prose and source also do not align cleanly; for example, the source appears to require an overbought RSI for short entries, while the overview does not include that condition. Fixed percentage stops may also fit changing volatility poorly. The document recommends broader testing and adaptive filters.

Key ideas

• The strategy uses the relative positions of the 20- and 90-period EMAs to define trend direction.
• Candlestick shadow and body proportions provide candidate entries aligned with that trend.
• The described sizing targets 2.5% risk per trade with a 2.5% stop distance and asymmetric profit thresholds.
• The source is truncated and appears to include a short-entry RSI condition absent from the overview.
• No backtest performance is reported, and fixed percentage stops may not suit all volatility conditions.

Tags

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