EMA Trend Filtering with Volatility-Qualified Candle Entries

Summary

This system combines a trend filter, a volatility threshold, and a three-candle momentum pattern. It permits longs only above a trend EMA and shorts only below it. For either direction, three consecutive candles must move in the same direction, their closes must progress, and the first and third candle bodies must exceed the middle candle’s body. The current bar’s high-low range must also exceed a multiple of the EMA of that range. The document describes scalp and swing modes with different target and stop reference levels, including current range or recent highs and lows.

The document supplies parameter descriptions and BTC/USDT futures backtest settings over about a month, but reports no measured results. The source uses high-low range as its volatility input, despite some explanatory language suggesting true range or ATR, and its stop/target handling is described separately from the strategy entries. Risks include trend reversals, false signals during volatility spikes, parameter sensitivity, and slippage. The proposed trend-strength, trailing-stop, and volume filters are not validated in the document.

Key ideas

• The trend EMA restricts long and short entries to the corresponding side of the trend filter.
• Entries require three directional candles with progressively advancing closes and a larger outer candle body.
• A high-low range threshold filters for movement beyond a smoothed volatility baseline.
• Scalp and swing modes use different reference levels for targets and stops.
• The published test settings include no performance evidence, and the source volatility calculation differs from parts of the description.

Tags

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