Trading Narrow Moving-Average States with Trend and Candle Signals

Summary

This strategy looks for trades when a fast EMA and slow SMA are close together, with their distance constrained by a configurable percentage. It then requires price and both averages to align for the trade direction. Entries are triggered by either a large candle body relative to ATR or a two-candle reversal pattern that breaks the previous candle’s high or low. A direction setting can allow long trades, short trades, or both.

Stops and profit targets are set from the signal bar’s close using ATR multiples and a configurable reward-to-risk multiple; prices are rounded to the instrument’s tick size. The script also offers chart markers and alert messages. The supplied material includes code but no backtest configuration, performance statistics, or discussion of fees and slippage. Its narrow-state threshold, trend filters, candle definitions, and exit distances therefore remain strategy choices to evaluate across instruments and market conditions. The descriptive overview is incomplete, so the rules in the visible script are the clearest account of the method.

Key ideas

• The strategy requires the fast EMA and slow SMA to be within a configurable distance.
• Long and short signals need price and moving averages aligned with the corresponding trend.
• Entries use either an ATR-sized candle body or a two-candle break of the prior candle’s range.
• ATR multiples define stop and target distances, with prices rounded to tick size.
• The provided material contains no reported test results or evidence of live performance.

Tags

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