DUAL MOVING AVERAGE CROSSOVER SYSTEM EXPLAINED
The Dual Moving Average Crossover trading system uses two moving averages, one short and one long. The system trades when the short moving average crosses the long moving average.
HOW IT WORKS
The system optionally uses a stop based on Average True Range (ATR). If the ATR stop is used, the system will exit the market when that stop is hit.
If the ATR stop is not used, the Dual Moving Average Crossover system does not have an explicit stop and will always be in the market, making it a reversal system. It will exit a position only when the moving averages cross. At that point, it will exit and enter a new position in the opposite direction. In this case, the positions are sized based only on ATR using a custom money manager.
If an ATR stop is not used, then the entry risk is essentially infinite. This will cause the R-Multiples relatively meaningless since all gains will be less than the infinite risk of entering without any stop.
The Dual Moving Average Trading System includes five parameters that affect the entries:
Long Moving Average
The number of days in the long moving average.
Short Moving Average
The number of days in the short moving average.
Use ATR Stops
If set to TRUE then the system will enter a stop based on a certain number of ATR from the entry point.
ATR Days
The number of days used for the ATR calculation. This parameter is visible and active only if Use ATR Stops is TRUE.
Stop
The stop width expressed in terms of ATR. This parameter is visible and active only if Use ATR Stops is TRUE.
If the Use ATR Stops is FALSE there are no stops, but the system uses a theoretical 1 ATR stop for the purposes of position sizing.
DUAL MOVING AVERAGES REPORTS
Using several classic trend following systems, like the Dual Moving Averages Trading System, we publish the Wisdom State of Trend Following report on a monthly basis. The report was built to reflect and track the generic performance of trend following as a trading strategy.
The composite index is made up of a mix of systems simulated over multiple timeframes and a portfolio of futures, selected from the range of 300+ futures markets over 30+ exchanges that Wisdom Trading can provide clients access to. The portfolio is global, diversified and balanced over the main sectors.
We publish updates to the report every month.
