Wave Trend Crossovers for Long Entries and Exits

Summary

This strategy uses LazyBear’s Wave Trend indicator to generate trading signals from two smoothed lines. It derives a volatility-adjusted series from the average price, its exponential moving averages, and the deviation from that average; a further smoothing produces WT1, while a four-period simple moving average of WT1 produces WT2. A crossover of WT1 above WT2 opens a long position, and a cross below closes it. Although the accompanying explanation discusses long and short decisions, the supplied strategy logic only enters long positions.

The listed indicator settings include a channel length of 10, an average length of 21, and overbought and oversold reference levels. The published test settings identify BTC-USDT futures, using hourly bars with 15-minute base data over about one month in late 2023, but no performance metrics are given. The document warns that crossovers can whipsaw in ranging markets and lag reversals. The shown rules have no stop-loss or take-profit, so results may depend heavily on market conditions and execution assumptions.

Key ideas

• The indicator builds a smoothed Wave Trend line from average price and its deviation from an exponential average.
• A second line smooths the main Wave Trend series for crossover signals.
• An upward crossover opens a long position, while a downward crossover closes it.
• The supplied strategy logic does not open short positions despite the broader description.
• The short BTC-USDT test setup includes no reported performance results, and the rules lack explicit stops.

Tags

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