SMA Crossover Trading with Peak Drawdown Monitoring and Trade Suspension
Summary
This long-short system enters when a 14-period simple moving average crosses a 28-period average: an upward cross signals long exposure and a downward cross signals short exposure. Alongside these entries, it tracks strategy equity from its previous peak, measures the fall to the current trough, and stops opening new positions if drawdown reaches a preset maximum. A table can summarize qualifying peak-to-trough cycles, including the preceding run-up, drawdown, and date.
The document describes a BTC USDT futures backtest setup spanning roughly one year, but provides no results or performance statistics. It warns that moving-average crossovers can lag and whipsaw in sideways markets, and that a drawdown stop may leave the strategy inactive during a recovery. The described mechanism suspends new trades; it does not establish that existing positions are closed when the threshold is reached. SMA and drawdown threshold selection remain important sensitivities, so the outline alone does not demonstrate effectiveness.
Key ideas
- An upward cross of the 14-period SMA over the 28-period SMA signals long exposure; a downward cross signals short exposure.
- The system tracks equity peaks and troughs to calculate drawdown.
- A preset maximum drawdown threshold prevents new entries after it is exceeded.
- A cycle table records qualifying drawdowns alongside prior run-ups and dates.
- Moving-average lag, sideways-market whipsaws, and missed recovery trades are stated risks; no backtest results are provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.