Madrid Ribbon and RSI Trend Strategy with Multi-EMA Confirmation

Summary

This strategy combines a ribbon of 18 moving averages, spanning periods 5 to 90, with a 100-period baseline and an RSI filter. It counts rising and falling averages to assess trend direction: at least 13 rising averages supports a long signal, while at least 9 falling averages supports a short signal. RSI must also be below 30 for a long or above 70 for a short. The described setup uses percentage-based profit targets and stops, with position size calculated from account funds and price.

The document explains the rationale and limitations, but provides no performance results. It warns that moving averages can lag during reversals, strict RSI thresholds can miss trades, and fixed stops may not fit different volatility conditions. Ranging markets can also generate confusing signals, while results may depend on parameter choices. Suggested extensions include ATR-based exits, an ADX filter, volume confirmation, and adaptive position sizing. The document recommends backtesting before live use, but does not report evidence that the strategy is profitable.

Key ideas

• The strategy gauges trend direction by counting rising and falling averages in a multi-period ribbon.
• Long entries require at least 13 rising averages and RSI below 30, while short entries require at least 9 falling averages and RSI above 70.
• Percentage-based profit targets and stop losses are set relative to entry price.
• Moving-average lag, ranging markets, strict filters, and parameter sensitivity are identified as risks.
• The document suggests testing volatility-based exits and additional trend or volume filters.

Tags

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