Long-Term Trend Following with a 500-Day Moving Average
Summary
The strategy uses a 500-day simple moving average to define long-term market direction. It buys when price crosses above the average and sells or reverses short when price crosses below it. The accompanying Pine Script implements those crossover conditions and plots the average and signal markers. Published settings describe a BTC/USDT futures test over January 2024, using hourly bars with 15-minute base data; no performance results are provided.
The note presents the approach as a low-frequency way to follow medium- to long-term trends while filtering short-term noise. Its main limitation is lag: signals can arrive after a market turn, and sharp reversals may cause losses. It also notes that infrequent trading can miss opportunities. Suggested refinements include testing other average periods, adding confirmation indicators, and applying stop losses and position controls. The document offers a strategy description and code, but no evidence that the method is profitable or robust across assets and market conditions.
Key ideas
- A 500-day simple moving average is used to represent the long-term trend.
- A cross above the average triggers a long entry, while a cross below triggers a short entry.
- The strategy aims to follow extended moves while reducing trading frequency and short-term noise.
- Lag, sudden reversals, and missed opportunities are identified as risks.
- The published settings describe a short BTC/USDT futures test, but include no reported results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.