Trend following · Beginner · Weekly check
EMA Crossover
How it works, and when it doesn't.
Speed matters. EMA catches trend changes 3–5 days earlier than SMA, which compounds significantly over many trades.
EMA12=< EMA26, hist=-1.883, price=> EMA200, GBM=71%. Full conditions not met — holding cash.
Why it works
EMAs respond faster than SMAs because they weight recent prices more heavily. The MACD histogram confirmation prevents entering on weak crossovers — only trade when momentum is genuinely accelerating, not just crossing.
The signal logic
- Long when EMA(12) > EMA(26) — fast average above slow average
- MACD histogram must be positive — momentum is accelerating not decelerating
- Exit when either condition reverses
When it fails
Earnings gaps and overnight moves that reverse immediately. High-frequency false crossovers in low-volatility, grinding markets.
- Best market
- Trending tech stocks, QQQ in bull markets
- Worst market
- Bear markets, highly volatile individual stocks
Backtest
| Sharpe ratio | -0.03 |
| Annual return | -1.7% |
| Worst drawdown | -17.5% |
| Trades in the backtest | 121 |
Backtest on daily bars, positions taken the bar after the signal (no look-ahead).
EMA Crossover, live.
Re-scored after every close.
The platform runs this and 32 other strategies against the live tape each day — with the evidence behind every number.