Momentum Moving Average Breakout Strategy

Strategy Logic

This strategy combines momentum indicators with moving average breakouts, entering trades when momentum aligns in a direction and price breaks the MA.

The trading logic is:

1. Compute short-term momentum, such as 5-day momentum

2. A long signal triggers when current and prior 2 momentum bars are above 50

3. Go long when price breaks above 5-day MA

4. A short signal triggers when current and prior 2 momentum bars are below 50

5. Go short when price breaks below 5-day MA

6. Use fixed profit target and trailing stop loss

The strategy capitalizes on momentum strength for trend identification, combining it with MA breakouts for high-probability signals to capture short-term price swings.

Advantages

• Momentum directionality strongly defines trend

• MA breakout improves signal quality

• Profit target and stop loss combined

Risks

• Consecutive momentum can lag

• Requires iterative parameter optimization

• Profit targets and stops need prudence

Summary

This strategy synergizes momentum and MA breakout systems with prudent profit taking and risk controls. But parameter tuning and stop loss optimization are crucial for real-world effectiveness.