Welles Wilder’s Trend Balance Point Momentum System
Summary
This trend-following system uses momentum over a configurable lookback and enters when the previous momentum reading is higher than the two preceding readings, or lower than both for a short signal. Its documented default momentum period is 2. At entry, it derives a stop from the prior bar’s typical price and range: below that level for a long and above it for a short. Profit targets are calculated from twice the typical price minus the prior low for longs or prior high for shorts. The source sets position size to 100% of equity.
A BTC/USDT futures configuration is provided for a short five-minute-bar test window, but no returns, drawdowns, or other performance evidence are reported. The document notes that momentum can lag, the fixed stop and target formulas may not suit changing conditions, and fixed sizing can expose the account to substantial risk. It recommends checking behavior across markets and timeframes and guarding against parameter overfitting. The summary’s favorable stability claims are not substantiated by the included backtest details.
Key ideas
- Long entries require the prior momentum reading to exceed each of the two earlier readings; shorts use the inverse condition.
- Stops and targets are calculated from the prior bar’s typical price, high, and low.
- The documented default momentum period is 2, and the source specifies 100% of equity for position sizing.
- Momentum lag, rigid exits, and fixed sizing are identified as risks.
- The published short-window test configuration does not include performance statistics.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.