Trend Following with Summed Price Deviations from a Moving Average

Summary

This trend-following method compares closing price with a simple moving average, then sums those deviations over a second lookback window. A positive sum indicates a long bias and a negative sum a short bias; the position is intended to reverse as the summed signal changes sign. The source also calculates a rate of change, though the shown entry logic does not use that value. Inputs are provided for optional profit targets, stop losses, and trailing exits, with these controls disabled by default in the published settings.

The document describes using multiple bars to smooth noise and remain in a trend, and proposes testing alternative lookbacks, adding other trend indicators, and improving position and volatility-based risk controls. It provides no backtest performance statistics. Its BTC futures configuration covers only a short sample, while the code's active logic does not clearly implement the claimed explicit close-on-reversal rule: it submits or cancels directional entries based on signal sign. The stated risks include late or premature reversals, large losses, parameter sensitivity, and leverage or margin exposure.

Key ideas

• The signal sums closing-price deviations from a simple moving average over a lookback window.
• A positive sum favors long exposure, while a negative sum favors short exposure.
• The source calculates rate of change but does not use it in the displayed entry conditions.
• Stop and trailing controls are optional and disabled in the published parameter settings.
• The brief BTC futures configuration supplies no evidence that the strategy is profitable or robust.

Tags

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