Simple Moving Average Crossover for Long-Only Trend Following

Summary

This strategy compares a fast and a slow simple moving average (SMA). It enters a long position when the fast average crosses above the slow average and closes that position when the fast average crosses below it. The listed default lengths are 10 and 30 bars. Although the parameter list includes a one-percent stop-loss setting and the prose discusses using stops, the source’s exit calculation does not clearly implement that percentage as a conventional stop price, so the risk control should be verified before use.

The document presents the method as simple and suited to directional markets, while noting that moving-average lag can delay entries and exits and sideways markets can generate repeated false signals. It suggests testing other lengths, adding filters, incorporating volatility measures, and adjusting position size. The backtest settings specify BTC/USDT futures over one month, but no performance figures are provided. Claims of relatively small drawdowns or broad suitability are therefore not established by the evidence shown.

Key ideas

• A fast SMA crossing above a slow SMA opens a long position.
• A downward crossover closes the long position; the described method does not enter short positions.
• The example uses moving-average lengths of 10 and 30 bars.
• Moving-average lag and sideways-market whipsaws are identified as key limitations.
• The stop-loss parameter’s implementation is unclear, and no backtest results are reported.

Tags

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