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:
Calculate the 50-day EMA and 200-day EMA.
When the 50-day EMA crosses above the 200-day EMA, it signals an uptrend, thus going long.
When the 50-day EMA crosses below the 200-day EMA, it flags a downtrend, thus going short.
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.
/*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)