Trend Following
Trend Following only enters once four conditions agree that a genuine, strong uptrend is underway - price above the mid-length trend line, not so far above it that a pullback entry would be…
Trend Following only enters once four conditions agree that a genuine, strong uptrend is underway - price above the mid-length trend line, not so far above it that a pullback entry would be chasing, the mid-length trend line itself above the long-term trend line, and trend strength (ADX) confirming it isn't just noise. It exits the moment any one of two conditions breaks: price falls back under the trend line, or trend strength fades. Unlike Momentum (all four filters must also flip to exit), the exit here is deliberately looser than the entry - a single cracked filter is enough to get out, favoring a quick exit over full confirmation.
How it trades
| Ingredient | Meaning |
|---|---|
| Close vs SMA(mid) | Is price above the mid-length trend line at all |
| Pullback tolerance | SMA(mid) - ATR * factor - price can't have pulled back further than this from the trend line |
| SMA(mid) vs SMA(long) | Is the mid-length trend line itself trending up relative to the long-term one |
| ADX | Trend strength - filters out weak/choppy moves that happen to be technically "up" |
Buy (all four must agree):
Close > SMA(mid) AND Close >= SMA(mid) - ATR * factor AND SMA(mid) > SMA(long) AND ADX > threshold
Sell (either is enough, only when already in a position):
Close < SMA(mid) OR ADX < threshold
When it works best
Works best in a sustained, strong trend where price stays comfortably above the mid-length average without deep pullbacks and ADX confirms real directional strength - the kind of move this is built to ride, not the kind it's built to catch early. The pullback-tolerance filter (Close >= SMA(mid) - ATR*factor) means a shallow pullback within a healthy uptrend doesn't disqualify a fresh entry, but a deep one does. Because the exit only needs one of two filters to break (unlike the all-four-agree entry), this strategy tends to exit faster than it enters - it gives up less of a reversal than a symmetric entry/exit rule would, at the cost of occasionally exiting a strong trend on a temporary ADX dip.
Backtest this strategy yourself
Build these rules on the Free plan, adjust them, and see how they would have traded.