Fitted moving averages for trend add-on entries

A confirmation, not an unseen turn

A moving-average is a fitted average of ordered prices that can rise or fall only after price has already done so. It cannot rise unless price has already risen, and it cannot fall unless price has already fallen, so it confirms a completed move rather than anticipating an unseen one.

Once a trend is identified, the average functions as an adaptive mid-range level for same-direction add-on entries. The same level can also mark fade points when price stretches away from it.

Starter lengths and a visible bracket

Visual-fit can begin with about 20 or 21 daily observations for stocks and about 9 or 10 for futures. Nearby averages are then placed around those starter lengths so the fit can be seen rather than treated as a default length that is already definitive.

When eight-, 10-, and 12-day averages are shown together, the space between the lines indicates how sensitive those skim-the-extreme entries are to the chosen lookback. A parameter-bracket of this kind shows whether the same extremes, and therefore the same entries, survive small length changes.

The same-session add-on rule

The rule-based-entry is a closed procedure that enters at the value of a rising or falling average, exits on that session's close, and suspends add-ons once price leaves the trend. The stated rule is to buy at the value of a rising average and exit on the close, or to sell at the value of a falling average and exit on the close.

These add-on-entry trades are same-direction placements at the average after a trend is already identified, rather than a first attempt to catch the turn. In the illustrated decline, the middle 10-day average marked at least three short attempts that were followed by limited adverse movement after entry.

When the trend add-on is suspended

When a declining average is crossed and price remains above it, same-session trend add-ons are suspended because a trading range is forming. That range-suspend step treats the opposite-side hold as a developing range rather than a continuation.

Stops from maximum adverse excursion

Maximum-adverse-excursion is the unfavorable move after entry, summarized so a stop can be placed where failed add-ons typically declare themselves. A stop belongs at the adverse-excursion distance that historically marks a failed add-on, and a tighter average fit produces more excursion beyond the average than a looser fit.

In the illustrated comparison, an eight-day average showed about eight to 12 ticks more adverse excursion than a 10-day average.

Decisions made before the session

Entry price, stop, and same-session close exit can be specified before the session, so the procedure does not require discretionary decisions during the day.