📈 Every Quant Beginner Starts with a Basic EMA Strategy! 📉
If you're diving into algorithmic trading, one of the simplest yet powerful strategies to start with is the Exponential Moving Average (EMA) Crossover Strategy.
In our basic setup:
🔹 EMA10 crosses above EMA50 → Buy Signal
🔹 EMA10 crosses below EMA50 → Sell Signal
But is this strategy profitable? 🤔
To evaluate, we must backtest it against historical data and compare Buy-and-Hold Returns vs. Strategy Returns 📊.
🚀 Backtesting on Multiple Periods
A single backtest isn’t enough! We need to test the strategy across different time periods to gauge its reliability under various market conditions.
🔍 Optimization is Key!
The real power lies in optimizing the EMA crossover strategy by:
✅ Trying different EMA lengths: EMA5, EMA10, EMA20, EMA50
✅ Testing on different timeframes: 1-min, 1-hour, daily, weekly
✅ Finding the best combination for specific stocks or crypto assets
💡 Key Findings:
Some stocks & crypto pairs work best with shorter EMAs (like 5 & 20)
Others respond better to longer EMAs (like 20 & 50)
The effectiveness depends on market trends and volatility
DOC:- https://docs.google.com/document/d/18YUNPSq8zRTGm6i8_rX5ajXo365X_AHilaydBg-mb2Y/edit?usp=sharing
