Triple EMA Trend Entries with a Two-Stage Trailing Stop

Summary

This strategy uses three exponential moving averages to identify an uptrend: the fast average must be above the medium one, which must be above the slow one. It opens long positions when that alignment appears and no position is open. A trailing stop follows the highest price since entry, initially using a wider distance and switching to a tighter distance after the trade reaches a profit threshold. The stop is plotted alongside the averages to show the signal and risk level.

The document describes the rules and possible extensions, but provides no performance results. Its stated limitations include lag during reversals, sensitivity to EMA and stop settings, and fixed percentage stops that may not suit changing volatility. The implementation is long-only and does not add entry filters beyond EMA alignment. The text suggests testing settings across market conditions and considering volatility-based stops, position sizing, and additional filters; these are proposals, not demonstrated improvements.

Key ideas

• A long entry is triggered when the fast, medium, and slow EMAs are ordered from highest to lowest and the strategy is flat.
• The trailing stop is calculated from the highest price reached since entry.
• Once the profit threshold is reached, the stop distance tightens and stays at the tighter setting for that trade.
• The strategy is long-only, and its fixed-percentage stop and lagging averages may be poorly suited to some market conditions.
• The document reports no backtest performance evidence.

Tags

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