Moving Average Directionality Trend Strategy
Strategy Logic
This strategy determines the long-term trend direction by analyzing the directionality of multiple moving averages. It goes long or short according to the trend.
The logic is:
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Compute moving averages of differing periods, e.g. 5-day, 20-day, 50-day, etc.
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Compare the directional tendency of the MAs to determine consistent alignment
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When MAs are uniformly trending up, a long-term bullish view is held. When uniformly down, long-term bearish.
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In bullish conditions, breakouts above downside stop loss triggers long entries
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In bearish conditions, breakouts below upside stop loss triggers short entries
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Trailing stops are used to control risk
The strategy emphasizes confirming the long-term trend before trading to reduce non-systematic risk.
Advantages
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Multiple MAs combine to judge long-term trend directionality
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Breakout entries follow the trend
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Trailing stop strategy controls risk
Risks
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MAs themselves lag prices
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Incorrect trend judgement can lead to sustained losses
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LONG or SHORT only misses opportunities
Summary
This strategy stresses determining the secular trend via MA directionality to minimize non-systematic risks. But judgement accuracy and stop tuning are critical.
/*backtest
start: 2022-09-07 00:00:00
end: 2023-06-24 00:00:00
period: 1d
basePeriod: 1h
exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}]
*/
// This source code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © HeWhoMustNotBeNamed
//@version=4- 1