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Strategy vault / Trend following

Trend Following Strategy Based on Dual EMA

This strategy is named "Trend Following Strategy Based on Dual EMA". It calculates two EMA lines of different periods and judges trend direction based on their relationship, to follow trends. Specifically, the…

Pine ScriptTrend followingMean reversionEMA
Author
ChaoZhang
Complexity
Starter · 29 lines
Parameters
0
Backtest bar
2h · intraday
Tested on
BTC/USDT · futures
Jump to codeView in vaultOriginal on FMZ

This strategy is named "Trend Following Strategy Based on Dual EMA". It calculates two EMA lines of different periods and judges trend direction based on their relationship, to follow trends.

Specifically, the trading logic is:

  1. Calculate the 50-day EMA and 200-day EMA.

  2. When the 50-day EMA crosses above the 200-day EMA, it signals an uptrend, thus going long.

  3. When the 50-day EMA crosses below the 200-day EMA, it flags a downtrend, thus going short.

  4. When trend reversal happens, existing positions are closed and direction is switched to the new trend.

The advantage of this strategy is using EMA "golden cross" and "dead cross" to determine the main trend direction. But EMA lagging requires parameter optimization, plus stop loss to manage risks.

In general, the dual EMA strategy suits mid-to-long term positioning by timely capturing major trend reversals for trend following. But traders still need to watch more indicators and maintain flexibility in strategy adjustment.

Source Pine Script

/*backtest
start: 2023-08-13 00:00:00
end: 2023-09-12 00:00:00
period: 2h
basePeriod: 15m
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/
// © Sonu1997

//@version=4
//@version=5
strategy('moving average strategy', overlay=true)

ema50 =ema(close, 50)
ema200 =ema(close, 200)



long = ema50 > ema200
short = ema50 < ema200

strategy.entry('long', strategy.long,  0, when=long)
strategy.entry('short', strategy.short,  0, when=short)

strategy.close('long', when=short)
strategy.close('short', when=long)

Published by ChaoZhang on the FMZ strategy square · last modified 2023-09-13. Collected in the Quant Trading Vault. Unvalidated research: re-test with your own data and costs before trusting it.

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