WaveTrend and EMA Trend Strategy with Volatility-Based Position Sizing

Summary

This strategy combines 10- and 20-period EMA crossovers with a 200-period EMA trend filter and above-average volume confirmation. It is described for four-hour or daily charts: longs follow bullish crossovers above the long EMA, while shorts follow bearish crossovers below it. WaveTrend levels provide momentum-based exit signals, alongside protective stops and profit targets.

Stops use recent five-period highs or lows, and position size is calculated from account equity, a chosen risk percentage, and stop distance. The target is set at twice the stop distance. The document also describes secondary WaveTrend exits conditioned on EMA and volume signals. It gives rules and parameter examples but no performance results; it cautions that fixed indicator levels may not transfer across instruments, moving averages lag, volume can be unreliable, and recent-extreme stops can be hit during volatility spikes. The claimed benefits are therefore unverified, and the strategy calls for market-specific testing and careful implementation.

Key ideas

• EMA crossovers generate entries when price is aligned with the 200-period trend filter.
• Volume above its 20-period average is required to confirm entry signals.
• Position size is tied to account risk and the distance to a stop based on recent price extremes.
• WaveTrend signals, stop-losses, and a two-to-one profit target provide separate exit mechanisms.
• The document reports no measured performance, and its fixed parameters may need market-specific validation.

Tags

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