SMA Crossover Trend Following with a Fixed Stop

Summary

This strategy uses crossovers between a one-period and a three-period simple moving average to signal long and short entries. It also describes tracking accumulated and last-trade profit, and places a fixed-distance stop based on the average entry price. The document frames this as a basic trend-following approach intended to catch changes in price direction.

The material explains the logic and suggests testing other moving-average lengths, adding price-breakout filters, trying alternative stop methods, and adjusting position size. It warns that frequent crosses in sideways markets can generate false signals. No performance results are reported, and the published backtest configuration covers only BTC/USDT futures over January 2024. The included implementation applies the stop to the long entry; its stop-price calculation and the stated pip distance are instrument-dependent, so the risk control should be verified before relying on it. The brief test setup does not establish stable live profitability.

Key ideas

• A one-period SMA crossing above or below a three-period SMA generates directional entry signals.
• The strategy includes a fixed-distance stop tied to the average entry price.
• Frequent moving-average crosses in sideways markets can produce unnecessary trades.
• Parameter searches, breakout filters, alternative stops, and position sizing are proposed as possible refinements.
• The stated backtest setup is limited to BTC/USDT futures in January 2024.

Tags

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