trading strategy based on moving averages

Abstract

Generating a Multi-Timeframe Trading Strategy based on Three Exponential Moving Averages and a Stochastic Oscillator

This learn combines a cardinal analysis of the rationale for conservative investors' transactions, likewise as long-run, low-risk strategies, and a specialized analysis of the search for entry points into short-term, unsound speculation. A hypothesis about the possible adaptation of high-risk unnaturalised-commute-market strategies to a low-risk of exposure stock market, founded on a multi-timeframe analysis of the product of 3 EMA advantageous stochastic (a combination of three moving averages and a stochastic oscillator), is proven. The study's modeling is based on walk-frontwards, blind simulation, queer procedure for realistically testing a hypothesis that can be performed in nine steps (Colby, 2003.) Colby's algorithm Its subject is ordinary shares of Sberbank of Russia, and its analysis shows an petit mal epilepsy of uncharacteristic of movements in the chosen period of maximum unpredictability, from 2007 to the submit. This analysis was conducted for two timeframes (much than cinque eld for the trend guidance and less than triad years for the entry point). For the EMA, parameters were set at 20, 50, and 200; for stochastic parameters were rig at 14, 3, and 3, 80/20. The "failure swing" policy change pattern and recently support and resistance lines were detected. The study's intense conclusions are that the simultaneous use of three EMAs makes determining a corridor OR a trend fairly reliable, as well as setting stop-losses. Moreover, the use of an oscillator is found not to always make up reasonable; its main task is to confirm a betoken. A stochastic oscillator with an explicit trend should not be analyzed for the healthy period low-level consideration—only the endmost values should be considered. Writhing averages and oscillators sacrifice fewer false signals on medium-term timeframes than on short-run timeframes. Ascribable a change in movement direction, identifying new (defined and correct) financial backing and resistance lines is found to be necessity.

Keywords

Algorithmic trading; Business enterprise market; Soaring averages; Random; Technical indicators; Trading strategies

Introduction

Digital technologies' theatrical role in the modern circular economy is becoming Sir Thomas More and many important (Berawi, 2022) . Studies hold shown a link between basic fallible values and gamble perceptions, between risk perceptions and run a risk behavior, and between put on the line deportment and accidents (Sutalaksana, 2022) . Therefore, an important task is to understate the emotional component of production processes and, particularly, to algorithmize the explore for the right trading strategies.

The development of forecast toll models is nonpareil of the most active coating Areas (Plotnikova, 2022) .Basic models hold similar objectives, based on minimizing boilers suit costs and augmentative the efficiency of easy resources (Balashova and Gromova, 2022) .

The aim of the current work is to create a new trading strategy for the stock exchange, based connected well-known specialized indicators. The foreign exchange securities industry is volatile; only professional traders put up take high risks, and their strategies aim to clearly specify entry and expiration points. To generate this study's strategy, the authors took a simple forex strategy as a basis and adapted it to the securities market for conservative investors. Our working hypothesis is that the trading strategy for a low-risk of exposure stock market backside comprise improved by adapting high-risk forex strategies.

Multi-frame analysis is an assessment of a inclined situation from different timeframes—a skill that many market participants lack. ( Singh, 2000 ) And this lack is importantly problematic because many investors do not consider rising graphical patterns in global trends or the impact these patterns can have on marketplace participants' trading decisions in other timeframes. Thus, our explanatory hypothesis is that adapting strategies is possible on the basis of multi-timeframe analysis, in which a longer timeframe determines a trend's management and a shorter timeframe determines an optimal entry point.

Conclusion

The stochastic oscillator is a up indicator, and EMAs are lagging indicators. The hunting for the optimal parameters for these indicators will allow a balance of the market signals, which will increase the trading scheme's effectuality. We have found the parameters that allow for an adaption of high-risk of exposure forex grocery trading strategies to the stock market. First, these parameters include two timeframes: the higher timeframe is five years—for the trend direction—while the frown timeframe is three years—for the first appearance point. Second, a combination of trio EMAs (20, 50, and 200 day by day) plus stochastic provides a main (fast) line averaging over 14 and smoothing over three periods, too as a signal (a slow-moving average after a fast-moving average) credit line with a period averaging 3, with 80% overbought and 20% oversold shares. Third, combination EMAs as a tendency indicator with a stochastic oscillator American Samoa a market speed indicator allows for the identification of patterns and the determination of the optimal points to explicit and close positions.

The specific quantitative results are two probable forecasts that suggest specific price levels at which to enter the market: (1) 80–90 rubles per portion out, and (2) 230–240 rubles per share. At the moment (November 2022), the share monetary value is 238 rubles per partake, which confirms our strategy's reliability and potential for interoperable application.

Discussion. A strategy's effectiveness can be assessed by its ratio of honest and false signals, compared with unusual strategies for similar timeframes. The fewer false signals, the more effective the scheme. The continuation of the study in testing the scheme with other indicator parameters to chance the best combination.

The resulting omen model is premeditated for a wide range of people; it is comprehensible and easy to use up. This access is how a trading algorithm can be generated and programmed for automated trading systems (per MetaTrader, InteractiveBrokers, and others) and developing a robo-advisor.

Acknowledgement

This inquiry was supported by the Academic Excellence Visualise 5-100, proposed by Peter the Cracking St. Petersburg Engineering school University.

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TY - JOUR
T1 - Generating a Multi-Timeframe Trading Strategy based happening Three Exponential Moving Averages and a Stochastic Oscillator
AU - Lyukevich Igor Nickolaevich,Rodionov Dmitry Grigorievich,Gorbatenko Irina Igorevna
JO - International Journal of Technology
VL - 11
IS - 6
SP - 291
EP - 319
PY - 2022
DA - 2022/12/07
SN - 2087-2100
Make - https://doi.org/10.14716/ijtech.v11i6.4445
UR - https://ijtech.eng.ui.ac.ID/article/view/4445