Moving Average and ADX Trend Following with Fixed Exits
Summary
This document describes a trend-following system that uses a simple moving average to set direction and ADX to filter for stronger trends. It enters long when price is above the average and ADX exceeds a threshold, and short when price is below the average with the same strength condition. RSI is calculated but the described trading rules do not use it. The document also outlines fixed stop-loss and take-profit levels and a configured trade size.
The accompanying settings identify a BTC/USDT Binance futures test spanning roughly one year, but no performance results are reported. There are inconsistencies between the prose and the source settings: for example, the prose describes a 20-period average and 150/300-point exits, while the listed defaults and code use different values. The description also suggests ADX may avoid choppy conditions, but gives no evidence that it does so reliably. It recommends testing volatility-adjusted exits, multiple timeframes, and additional market filters; these are proposals, not validated improvements.
Key ideas
- The system uses a moving average to define trade direction and ADX to screen for trend strength.
- Long and short entries require price to be on the corresponding side of the average and ADX to exceed a threshold.
- RSI is calculated but is not part of the stated entry logic.
- Fixed exits and position size are specified, though the prose and parameter defaults disagree.
- The document provides test dates and an instrument but reports no backtest performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.