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Strategy vault / Trend following

EMA Trading Strategy

EMA Trading Strategy This strategy trades based on EMA analysis, with the following rules: - Enter long if previous day's close is above EMA - Exit long if current candle closes below EMA Advantages of this strategy…

Pine ScriptTrend followingEMA
Author
ChaoZhang
Complexity
Starter · 64 lines
Parameters
2
Backtest bar
1d · swing
Tested on
BTC/USDT · spot
Jump to codeView in vaultOriginal on FMZ

EMA Trading Strategy

This strategy trades based on EMA analysis, with the following rules:

  • Enter long if previous day's close is above EMA

  • Exit long if current candle closes below EMA

Advantages of this strategy:

  • Uses EMA to determine trend direction
  • Simple and clear rules, easy to implement
  • Customizable EMA period for optimization

Potential issues:

  • Prone to false signals during range-bound markets
  • Late entry, risks being caught in whipsaws
  • No stop loss, risks uncontrolled losses
  • No trade frequency or position sizing rules

Overall, the EMA strategy works better in trending markets but should be used cautiously. Adding stops and filters would help optimize the strategy.

Parameters

NameDefaultWhat it controls
v_input_121Length
v_input_22000Year

Source Pine Script

/*backtest
start: 2023-01-01 00:00:00
end: 2023-09-10 00:00:00
period: 1d
basePeriod: 1h
exchanges: [{"eid":"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/
// © ericdwyang

//@version=5
strategy("EMA Strat", overlay=true, margin_long=100, margin_short=100)

// EMA Variables
emaInput = input(21, "Length")
ema = ta.ema(close, emaInput)

// Variable Declaration
p = 0

start = false

// Start Date
yearInput = input(2000, "Year")
if (time >= timestamp(2000,01,01,01,01))
    start := true


// Check first candle relative to EMA
if (close > ema and start == true)
    p += 1
    strategy.entry("Long", strategy.long, comment = "Entry")
    

// Candle close above EMA (p + 1, count reset to 0)
above = close[1] > ema[1]
if (above)
    p += 1



// Candle close below EMA (reset p to 0, count -1)
below = close < ema
if (below)
    p := 0
    strategy.close("Long", comment = "Flat")

// // Exit Position
// if (redCount == -2)
//     strategy.close("Long", comment = "Flat")
    
// goLong = p[1] == 0 and p == 1
// flatten = p == 0
    
// // Restablish long    
// if (goLong and start == true)
//     strategy.entry("Long", strategy.long, comment = "Entry")
    

plot(p)
plot(ema)

Published by ChaoZhang on the FMZ strategy square · last modified 2023-09-11. Collected in the Quant Trading Vault. Unvalidated research: re-test with your own data and costs before trusting it.

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