HMA Crossover Trend Following with Momentum Exits and ADX Filtering

Summary

This trend-following method uses two moving averages to establish direction and a momentum measure to signal when to exit. Its example defaults to short Hull moving averages, entering long when the fast average crosses above the slow one and short when it crosses below. ADX must exceed a threshold for entries. A change in the fast average’s rate of change is used to identify a possible reversal and close the corresponding position.

The document describes the logic and lists risks, including lagging crossovers, false signals, imperfect ADX filtering, and the absence of transaction costs in the strategy. It supplies a short backtest configuration for BTC/USDT futures, but no performance statistics, so it does not establish that the method is profitable. It suggests testing alternate average and momentum settings, adding filters, and defining explicit stop-loss and cost assumptions before practical use.

Key ideas

• Moving average crossovers provide the initial long or short direction.
• ADX filtering restricts entries to periods when the trend-strength measure exceeds its threshold.
• A turn in the fast average’s momentum is used to close an existing position.
• The published backtest setup includes no reported performance results, and trading costs are not modeled in the strategy description.

Tags

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