Moving Average Envelope Pullbacks with Staged Position Adds

Summary

This long-only strategy uses an SMA or EMA basis with percentage-offset upper and lower envelopes. It begins buying when the low falls below the lower band, subject to a cooldown and conditions tied to the average entry price, last purchase price, and basis-line direction. It can add in stages up to eight times, updating its average entry price after each purchase. The strategy exits the full position when price meets a take-profit condition relative to average entry or falls through a stop-loss threshold; its code also requires a move above the upper band for the take-profit exit. The stated defaults include a 13-period envelope, 6.6% offset, 15% stop, 5% target, and seven-candle cooldown.

The approach combines countertrend entries with simple trend awareness and staged sizing. The document warns that persistent declines can produce losses and substantial capital demands. It describes a backtest window limited to the most recent 365 days but provides no performance results or market-specific test configuration. Parameter sensitivity, cooldown timing, and the large drawdown potential of repeated adds remain important limitations.

Key ideas

• The envelope bands are formed by offsetting an SMA or EMA basis by a percentage.
• Entries occur below the lower band and are gated by cooldown, price comparisons, and trend conditions.
• The strategy permits up to eight staged purchases and tracks the average entry price.
• It closes all positions after its average-price stop or target conditions are met, with the code also checking for an upper-band move before taking profit.
• The described backtest is limited to 365 days, but no performance statistics are supplied.

Tags

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