Dual Moving Average Chasing Strategy

Overview

This is a moving average based chasing strategy. It utilizes the direction of moving averages and candle shadows to determine price trends and momentum for entries and exits. The core logic is to go long/short when the color of the second moving average changes, and use strong signals from the third moving average to add positions, up to 5 additions.

Strategy Principle

The strategy uses Heikin Ashi moving averages to determine trends. Specifically, the strategy defines 3 moving averages:

1. The second moving average is used to determine trend reversal. Enter trades when its color changes.
2. The third moving average is used to identify strong breakout signals for adding positions.

Entry Logic:

1. When the second moving average color changes from red to green, go long.
2. If the third moving average now shows a strong uptrend signal (green candle with no lower shadow), add position.
3. Allow up to 5 additions.

Exit Logic:

1. When either moving average color changes, close all positions.

Advantage Analysis

The advantages of this strategy:

1. Heikin Ashi reduces noise for better signals.
2. Dual moving averages combo improves entry timing accuracy.
3. Adding positions to chase trends allows bigger profit.

Risk Analysis

There are also some risks:

1. Dual moving average crossovers can cause whipsaws.
2. Over-adding may increase losses.
3. Parameters need tuning for different products and timeframes.

Risks can be managed via stop loss, reducing additions, and parameter optimization.

Optimization Directions

The strategy can be improved in the following aspects:

1. Test different parameter sets for the moving averages.
2. Optimize stop loss methods like trailing stop loss.
3. Test parameters separately for different products.
4. Add filters to prevent adding too fast.
5. Incorporate other indicators for entry timing.

Summary

In summary, this is a trend chasing strategy based on dual moving average directionality. It combines the advantage of trend and momentum analysis for expanded profits from adding positions. But risks need to be managed via stop loss and parameter tuning. Further improvements can be made in optimizing stops, tuning parameters etc.