Three-Moving-Average Crossovers for Trend Following

Summary

The strategy uses short-, medium-, and long-period moving averages to generate directional signals. Its stated rules go long when the 7-period average crosses above the 13-period average while the 21-period average is rising, and short when the shorter average crosses below the middle average while the longer average is falling. The source also allows several moving-average types and an optional Heikin Ashi input.

The document gives no performance results. It describes choppy markets, lagging signals, and missed turning points as limitations, and suggests testing volatility filters, stop losses, parameter choices, and limit-order execution. There is a notable difference between the prose and code: the source enters long or short when price is above or below the long average and the short average is above or below the middle average; it does not test for crossovers or the long average's slope. Treat the prose rules and implemented conditions as distinct, and validate any interpretation with backtesting.

Key ideas

• The stated long signal combines an upward short-to-middle moving-average crossover with a rising long-period average.
• The stated short signal combines a downward short-to-middle crossover with a falling long-period average.
• The source supports several moving-average formulas and an optional Heikin Ashi data input.
• The source's entry rules differ from the crossover and slope conditions described in the prose.
• Choppy markets and lagging averages can produce false signals or late entries.

Tags

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