MBO Trend Following with a Smoothed Moving-Average Spread

Summary

This strategy builds an MBO indicator from the difference between a fast and a slow simple moving average, then smooths that spread with another simple moving average. The stated default periods are 25 for the fast average, 200 for the slow average, and 18 for smoothing. When MBO is above its smoothed value, the strategy takes a long position; when it is below, it takes a short position. A reverse-trading option can invert those directions.

The document presents the method as a medium- to long-term trend-following system and discusses how changing the periods may affect signal frequency and sensitivity. It gives BTC/USDT futures backtest settings for a one-month window but reports no results or comparative evidence. The source repeatedly enters according to the current signal and does not define a stop-loss or a separate exit rule; a direction change can therefore reverse the position. The accompanying risk discussion flags delayed response at trend reversals, false signals, parameter sensitivity, and potentially large losses, and suggests adding filters, stops, and position sizing.

Key ideas

• MBO is calculated as the difference between fast and slow simple moving averages.
• The default fast, slow, and smoothing periods are 25, 200, and 18.
• The strategy goes long when MBO exceeds its smoothed average and short when it falls below.
• A reverse option can switch the direction assigned to each signal.
• The document reports backtest settings but no results, and the source has no explicit stop-loss rule.

Tags

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