Four WMA Crossovers with Percentage Take-Profit and Stop-Loss

Summary

This strategy uses four weighted moving averages to generate long and short entries, then closes each position at a percentage-based profit target or loss limit. Its stated rules enter long when one shorter-period WMA crosses below a longer-period WMA, and short when a shorter-period WMA crosses above a longer-period WMA. The published defaults specify four WMA lengths and equal percentage settings for take profit and stop loss.

The document describes the approach as a simple trend-turning method with explicit per-trade exits, but gives no performance results or backtest analysis. It warns that moving averages can lag, crossover signals can alternate frequently and incur costs, and fixed exit percentages may not fit changing volatility. There is also an inconsistency: the prose describes the shorter and longer averages in groups that do not match the parameter names, while the source uses specific crossovers between the first pair and the second pair. Treat the stated rules as a strategy outline that needs implementation checks and testing.

Key ideas

• Four weighted moving averages are used to form crossover entry signals.
• The strategy opens long and short positions on opposite crossover directions.
• Each position receives a percentage-based take-profit level and stop-loss level.
• Lagging signals, whipsaws, trading costs, and fixed exit thresholds are key limitations.

Tags

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