Multi-EMA Trend Following with Conditional Trailing Stops

Summary

This strategy uses a hierarchy of exponential moving averages to define trend direction and time entries. The long-term pair, EMA 340 and EMA 500, sets the broad bias; a crossover between EMA 50 and EMA 120 supplies a potential entry, subject to additional price-position conditions. Long and short signals require the medium-term crossover to agree with the long-term direction.

Risk control begins with a fixed percentage stop, then switches after a specified number of bars to a stop based on EMA 500. If price has stayed on the favorable side of EMA 8 for a required run of bars, the stop instead follows EMA 9. Positions close when price crosses the active stop, and a reverse signal alone does not close an open trade. The document explains the design and names risks such as lag, choppy-market losses, gaps, and parameter sensitivity, but supplies no performance evidence. Its prose describes a full-capital default that is not confirmed by the visible code excerpt, so sizing assumptions need verification before use.

Key ideas

• The long-term EMA pair sets directional bias, while a medium-term crossover triggers candidate entries.
• Entry signals also require price to satisfy additional EMA-based zone conditions.
• A fixed initial stop gives way to a moving-average stop after a holding period.
• A sustained favorable position relative to EMA 8 switches the stop to EMA 9.
• The source describes stop-driven exits but provides no backtest results or market-specific evidence.

Tags

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