Moving Average

The moving average is a simple yet effective tool for trend filtration. A momentum investing portfolio should not include stocks trading below their long-term moving average.

The 200-day exponential moving average (EMA) is a widely used trend filter for identifying long-term trends.

If this option is selected, only stocks trading above the 200-day EMA will be considered for the momentum portfolio.

Stocks that fall below the 200-day EMA will be exited from the portfolio.

You can also select the 100-day EMA along with the 200-day EMA. In this case, only stocks trading above both moving averages will be included in the portfolio.

You can choose other parameters instead of 200-day or 100-day moving averages based on your preference.

If you prefer a simple moving average (SMA) instead of an EMA, you can select it from the ‘Popular’ section under entry conditions.

Important Note: The 200-period moving average is always calculated on a candlestick chart, even if a different charting method is selected.

The 200-day EMA is the recommended trend filter to start with.