The Three EMA Cross strategy combines a classic fast/slow moving average crossover with a longer trend filter. After the fast EMA crosses above the slow EMA, the strategy waits for a pullback to the fast average while the closing price remains above a broader trend EMA. This setup attempts to capture continuation moves after a brief retracement within the prevailing trend.
Positions are exited when momentum fades and the fast EMA crosses back below the slow EMA. A percentage-based stop loss protects the position if price moves against the trade. The technique works well on markets with persistent trends and tends to avoid choppy ranges.
- Entry Criteria:
- Recent fast EMA cross above slow EMA within last N bars.
- Current close ≥ fast EMA and session low ≤ fast EMA.
- Trend EMA ≤ current close.
- Long/Short: Long only.
- Exit Criteria:
- Fast EMA drops below slow EMA.
- Stops: Stop loss at stoplosspercent of entry price.
- Default Values:
- FastEmaLength = 10
- SlowEmaLength = 20
- TrendEmaLength = 100
- StopLossPercent = 2.0
- CrossBackBars = 10
- Filters:
- Category: Trend following
- Direction: Long
- Indicators: EMA
- Stops: Yes
- Complexity: Medium
- Timeframe: Any
- Seasonality: No
- Neural networks: No
- Divergence: No
- Risk level: Medium