Multi-Timeframe SMA and RSI Trend Confirmation with ATR Risk Levels

Summary

This trend-following design confirms direction on a one-hour chart and seeks entries on a 15-minute chart. On each timeframe, a 9-period simple moving average is compared with a 21-period average, while RSI filters signals near overbought or oversold conditions. A long requires the short average to be above the long average on both timeframes with RSI below its overbought level; the short setup reverses those conditions. ATR is used to set dynamic stop and profit levels, and the example source calculates quantity from capital, a risk percentage, and ATR.

The source illustrates stops at 1.5 ATR and targets at 3 ATR, but the document supplies no backtest results or evidence that the approach improves outcomes. It identifies trend reversals, choppy-market overtrading, slippage, and parameter sensitivity as risks. The prose also describes position sizing based on capital, risk tolerance, and volatility, while actual results would depend on execution assumptions and whether the example quantity formula matches the intended risk. Testing across market regimes and checking position sizing are necessary before drawing conclusions.

Key ideas

• The strategy requires moving average alignment on both hourly and 15-minute timeframes before signaling a trade.
• RSI acts as a momentum filter by excluding entries at the stated overbought or oversold extremes.
• ATR sets example dynamic stop and target distances, and also contributes to the example position-size calculation.
• The document warns that reversals, ranging markets, slippage, and parameter sensitivity can weaken the method.
• No performance results are provided, so the strategy's effectiveness remains unverified.

Tags

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