Using Fast and Slow EMA Crossovers to Follow Trends

Summary

This note describes a moving-average crossover approach for following trends. It calculates a fast EMA and a slow EMA, using a 12-period and 26-period pair as examples. A fast EMA crossing above the slow EMA signals a long entry, while a downward cross is described as indicating a bearish trend. The narrative proposes short trades in that case, although the supplied source only opens a long on an upward cross and closes that long on a downward cross.

The document frames the method as a simple way to participate in medium- to long-term trends, while acknowledging that crossovers lag and can lose money around reversals or when parameters fit poorly. It suggests stops, additional indicators, volatility-based sizing, and portfolio combinations as possible extensions. A short BTC perpetual backtest configuration is provided, but no results are stated; the source’s date filter is also effectively disabled, limiting what can be inferred from the stated backtest settings.

Key ideas

• The example uses a fast EMA and a slow EMA to identify directional crossover signals.
• The narrative describes long entries on upward crosses and short entries on downward crosses.
• The supplied source instead closes a long position on a downward cross and contains no short entry.
• Crossover lag and parameter choice can leave the strategy exposed to reversals and losses.
• A brief BTC perpetual backtest setup is included without performance results.

Tags

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