Trading Consecutive Moving Average Direction Changes
Summary
This strategy tracks whether a selected moving average rises or falls from one bar to the next and counts consecutive bars in each direction. Once the count reaches a user-defined threshold, it enters long after a run of rising values or short after a run of falling values. The moving average can be SMA, EMA, WMA, or linear regression, and chart coloring and an optional trend line provide visual context.
The approach seeks to filter single-bar noise by requiring persistence in the moving average’s direction. Its main limitations are lag, delayed entries after fast reversals, and false signals in choppy markets; the threshold and average type also affect responsiveness. The document suggests testing parameters across instruments, adding stops or confirmation indicators, and considering broader trend filters. It includes a Bitcoin futures backtest setup and source code but no reported results, so it does not establish profitability or the claimed reduction in noise.
Key ideas
- The strategy counts consecutive rises or falls in a selected moving average.
- A threshold crossing triggers a long entry after rising bars or a short entry after falling bars.
- Users can choose among SMA, EMA, WMA, and linear regression averages.
- Longer thresholds can delay entries, while shorter thresholds may be more vulnerable to noise.
- The supplied Bitcoin futures setup includes no reported performance evidence.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.