EMA Trend Bias Strategy
Two EMAs plus an ATR-based neutral zone — like the commercial Larsson Line, but tunable, transparent, and backtested. Choose your bias.
Quick Facts
- Type:
- Trend Following · Volatility
- Plan:
- Pro
- Asset Classes:
- Crypto · Stocks · ETF · Commodities · Forex
- Indicators:
- EMA · ATR
Platform Backtest
ⓘ- CAGR
- +35.9%
- Win Rate
- 57%
- Max DD
- -21%
Default parameters · BTCUSDT · 1d · 4 years · B&H +18.1%
How It Works
EMA Trend Bias uses the same core logic as well-known commercial trend-following indicators (e.g. the so-called "Larsson Line"): two exponential moving averages combined with an ATR-based neutral zone. The difference here: you can tune the parameters yourself and backtest before spending several hundred dollars on a closed indicator.
The strategy works on two layers:
Layer 1 — 3 trend states (derived from the EMA difference and the ATR corridor):
- BULLISH (yellow): fast EMA clearly above slow EMA, gap > ATR × multiplier
- BEARISH (blue): fast EMA clearly below slow EMA, gap < −ATR × multiplier
- NEUTRAL (grey): fast and slow EMAs within the ATR corridor — undecided
Layer 2 — 4 trading modes (which state transitions trigger BUY/SELL):
- Bearish Bias: Grey → Yellow = BUY · Yellow → Grey = SELL — conservative, only on clear confirmed trends
- Bullish Bias: Blue → Grey = BUY · Grey → Blue = SELL — early entries, early exits
- Cautious: Grey → Yellow = BUY · Grey → Blue = SELL — symmetric, fires only out of the neutral zone
- Aggressive: Blue → Grey = BUY · Yellow → Grey = SELL — early everything, more trades
The ATR-based neutral zone is the key innovation: it adapts to current volatility. In quiet markets the neutral zone shrinks (signals fire faster); in volatile markets it expands (signals require larger moves to fire). This filters out a lot of false signals that simple EMA cross strategies suffer from.
Entry & Exit Rules
Entry
- ●Trend state transition matches the chosen Trading Mode
- ●Position is currently flat
- ●ATR neutral zone width has been respected
Exit
- ●Trend state transition matches the SELL trigger of the chosen mode
- ●Position is currently long
Parameters
| Name | Default | Range | Description |
|---|---|---|---|
| Fast EMA Period | 30 | 5–100 | Fast exponential moving average period. |
| Slow EMA Period | 60 | 10–200 | Slow exponential moving average period. |
| ATR Period | 60 | 5–200 | Lookback for the ATR (Average True Range) used to size the neutral zone. |
| ATR Multiplier | 0.3 | 0.05–2 | Width of the neutral zone in ATR units. Higher = wider neutral zone, fewer signals. |
Live Backtest
BTCUSDT · 1d · 4 years · default parameters · refreshed daily
Run with my own parameters →Pseudo-Code
expand
// Compute indicators
fast = EMA(close, ema_fast)
slow = EMA(close, ema_slow)
atr = ATR(close, atr_length)
gap = fast - slow
zone = atr * atr_multiplier
// Classify state
if gap > zone:
state = BULLISH (yellow)
else if gap < -zone:
state = BEARISH (blue)
else:
state = NEUTRAL (grey)
// Mode-specific entry/exit (example: Cautious)
if prev_state == NEUTRAL AND state == BULLISH:
if position.is_flat:
BUY
if prev_state == NEUTRAL AND state == BEARISH:
if position.is_long:
SELLStrengths & Weaknesses
Strengths
- ●Volatility-adaptive — fewer false signals in choppy markets
- ●4 modes give granular control over your trade frequency
- ●Tunable replacement for closed-source paid indicators
- ●Works on all asset classes including forex
Weaknesses
- ●5 parameters — easy to overfit
- ●Mode choice strongly affects results — needs explicit choice, not a default
- ●Lagging by design — late entries on fast moves
- ●ATR multiplier too low collapses the neutral zone, too high dampens all signals
Frequently Asked Questions
Which trading mode should I start with?
Start with **Cautious** — it's symmetric (BUY only out of neutral, SELL only into neutral) and gives the cleanest baseline. Once you understand the indicator, try Bearish Bias for trending markets (waits for confirmation) or Bullish Bias for ranging markets (early entries, early exits).
How is this different from the Larsson Line?
The signal logic is the same family of trend-following techniques — both use two EMAs and an ATR neutral zone. Larsson Line is a closed commercial product with fixed parameters. EMA Trend Bias is open and tunable: pick your own EMAs, your own ATR multiplier, your own mode. We're not affiliated with the Larsson Line product.
What's the typical hit rate?
Hit rates depend heavily on mode, asset, and timeframe. On Bitcoin weekly with the Cautious mode and default 30/60 EMAs, historically around 55–65 % win rate with a positive expectancy — but always check the live stats above the chart for the current observed values.
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OBV-MACD
Apply MACD logic to On-Balance Volume — combining volume confirmation with trend signals. Volume tells you the truth that price hides.
Don't want to backtest yourself?
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