EMA Trend Filtering with Three-Candle Momentum and Dynamic Exits

Summary

This short-term strategy uses a 50-period EMA to set directional bias: it considers longs above the average and shorts below it. Entry confirmation comes from three consecutive candles moving in the same direction, with each candle body larger than the preceding one and closes progressing in that direction. An ATR variant is described as a volatility filter, while recent highs and lows define dynamic take-profit and stop-loss levels.

The document provides a conceptual framework and discusses possible additions such as higher-timeframe filters, volume confirmation, trailing exits, and account-based position sizing. It supplies no measured results or complete evidence that the rules are profitable. The available source excerpt is incomplete, so the precise ATR calculation, thresholds, and exit implementation cannot be established from the text. Risks include false signals in ranges, slippage during fast moves, excessive trading in volatile periods, delayed response to reversals, and parameter sensitivity; the document recommends backtesting and forward testing.

Key ideas

• The 50-period EMA filters trade direction, with long setups above it and short setups below it.
• Entries require three same-direction candles with successively larger bodies and progressively advancing closes.
• An ATR variant filters for sufficient volatility, while recent price extremes set stop and target levels.
• The excerpt does not establish the exact ATR formula or full execution rules, and reports no performance results.
• Ranging conditions, slippage, overtrading, and parameter sensitivity are identified as risks.

Tags

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