SAR and EMA Trend Confirmation with RSI, ADX, and ATR Risk Controls

Summary

This trend-following strategy combines Parabolic SAR and a fast EMA for direction, RSI for momentum, and ADX for trend strength. A long signal occurs when price crosses above SAR, closes above the EMA, RSI exceeds 60, and ADX meets its threshold; shorts use the opposite price and RSI conditions. The document specifies short RSI and EMA periods and a higher ADX threshold, so signals may be sensitive to noise and delayed around reversals.

Stops and targets are set using ATR multiples, while position quantity is calculated from a fixed fraction of account equity. The stated backtest setup covers DOGE/USDT futures on daily bars from spring through year end, but it reports no returns, drawdown, or other results. The source also calculates order size from risk divided by price, so the described fixed-risk approach does not explicitly account for stop distance when sizing. The strategy may underperform in ranging markets or during volatility spikes.

Key ideas

• A long or short signal requires agreement between price relative to SAR and EMA, an RSI threshold, and an ADX threshold.
• The defaults use a short RSI period and a very short EMA, which the document identifies as potential sources of overtrading.
• ATR sets the stop distance and a wider profit target, while account equity is used to determine position quantity.
• The published daily futures test configuration provides no performance statistics to evaluate the strategy.

Tags

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