SMA-3 Breakout Strategy with Percentage-Band Entries

Summary

The SMA-3 method builds three lines from a simple moving average of closing prices: a central average and upper and lower bands offset by a percentage. The script places a long limit entry at the lower band and, when enabled, a short limit entry at the upper band. It closes all positions when a bar crosses the central average or when the selected date window ends. This order logic differs from the prose, which describes entering after price breaks beyond an outer band and setting profit targets at the opposite line.

The document frames the method as a simple way to trade short-term price swings and notes risks from false signals, slippage, and sideways or volatile markets. Length, band offset, trade direction, capital allocation, and date filters are adjustable. A BTC/USDT futures backtest configuration is included, but no performance results are stated. The strategy’s large default capital allocation and pyramiding setting make position sizing and exposure important considerations; the text recommends careful risk management and parameter testing.

Key ideas

• The strategy plots a central SMA with percentage-offset upper and lower bands.
• The source uses limit entries at the bands, rather than the breakout entries described in the prose.
• Positions are closed when price crosses the central SMA or the date window ends.
• The method may produce false signals and can be affected by slippage and market conditions.
• The document gives a backtest setup but no performance results.

Tags

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