Equal-Length EMA/SMA Crossover Momentum Strategy

  • This momentum and trend-following strategy captures the majority of any trending move, and works well on high timeframes.
  • It uses an equal-period EMA and SMA crossover to detect trend acceleration/deceleration, since an EMA places a greater weight and significance on the most recent data.
  • This version is optimized for longs, and designed to cut your losses quickly and let your winners run.
  • To reduce noise and optimize entries, we combined this with an overall trend bias for further confluence.

How it works:
  • Signals are determined by the crossover of an EMA and SMA of the same length, e.g. EMA-50 and SMA-50.
  • The overall trend bias is determined using a slower SMA golden/death cross, e.g. SMA-50 and SMA-100.
  • The signal is stronger when it occurs in confluence with the overall trend bias, e.g. when EMA-50 crosses over SMA-50, while above the SMA-100. This is analogous to only opening long positions in a bull market.

Signal description:
  • Trend Buy: EMA crosses above SMA , and overall trend bias is bullish . Buying is in confluence with the overall trend bias.
  • Risky Buy: EMA crosses above SMA , and overall trend bias is bearish . Buying is early, more risky, and not in confluence with the overall trend bias.
  • Late Buy: SMA crosses above BIAS_SLOW. This gives further confirmation of bullish trend , but signal comes later.
  • Sell: EMA crosses under SMA .

Strategy entry and exit conditions:
  • This version enters a Long when "TREND BUY" is signalled.
  • This version has Sell/Shorts disabled because UP ONLY.
  • Long entry: Strategy enters Long when EMA is above SMA , while overall trend bias is bullish .
  • Long exit: Close long when EMA crosses under SMA .
Open-source script

In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.

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