SMA and TRIMA Crossovers for Trend Following
Summary
This note describes a moving-average crossover method that compares a short simple moving average with a smoother, double-averaged line. An upward cross is treated as a long entry, while a downward cross closes the long position. The description presents the approach as a way to identify trends while smoothing short-term price noise, with possible filters such as volume, MACD, adaptive averages, or agreement across timeframes.
The document gives formulas and strategy rules but no performance results. The accompanying source uses a 5-period SMA against a twice-smoothed 10-period average, while the prose also refers to a 10-day SMA, so the stated setup is not fully consistent. The source enters long and closes that position on a sell signal; it does not implement the short trades suggested by some explanatory text. The method also lags price and may whipsaw in sideways markets, and its results depend on parameter choices.
Key ideas
- An upward cross of the short SMA over the smoothed average triggers a long entry.
- A downward cross triggers an exit from the long position in the provided implementation.
- Applying a moving average to an average smooths the signal but can increase lag.
- Sideways markets can produce false crossovers, while parameter choices affect results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.