SMA Crossover Strategy with Candlestick Confirmation and ATR Risk Sizing

Summary

This strategy combines short and longer simple moving average crossovers with candlestick pattern recognition to generate trade signals. It also marks price crossings of a 22-period SMA with visual labels. The listed patterns include engulfing candles, hammers, and harami; these are presented as supporting confirmation rather than standalone signals.

Risk controls use ATR to set stop distance and calculate position size from capital and a per-trade risk percentage. A configurable risk-reward ratio sets the profit target. The document describes these as a structured approach to volatility-aware stops and consistent risk exposure, but it provides no measured performance results. It flags lagging crossover signals, whipsaws in ranging markets, gaps beyond stops, and sensitivity to parameter choices. It also notes that pattern recognition may produce false signals, and proposes additional trend, volume, time, and higher-timeframe filters as possible refinements.

Key ideas

• Short and longer SMA crossovers provide the main directional entry signals.
• Candlestick patterns and 22-period SMA crossing labels add visual confirmation.
• ATR-based stop distances adapt protection to volatility and inform position sizing.
• Position size is calculated from capital, stop distance, and the chosen per-trade risk.
• The strategy description identifies lag, whipsaws, gaps, and parameter sensitivity as limitations.

Tags

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