RAE-Adaptive Smoothed Momentum Trend

Family: trend_following · Regime: trending · Complexity: medium · Asset classes: Forex, Commodities, Indices · Timeframes: H1Line, H4, D1

Thesis

Market trends are best captured by filtering out price noise through multiple smoothing layers. RSIOMA provides a macro-regime, while MACD and ASH identify synchronized momentum shifts. By using Relative Absolute Error (RAE) for stop-loss positioning, the strategy adapts to 'model error'—widening stops when price behavior deviates from its historical mean error, which typically occurs during volatile trend expansions.

Components

• RSIOMA (RSI of Moving Average) (regime) — Acts as the primary trend filter (Regime); ensures the strategy only trades in the direction of smoothed momentum to avoid counter-trend noise.
• FakeCandle (direction) — Provides a 'clean' price action filter based on NNFX principles, ensuring entry candles are not 'fake' or indecisive.
• MACD Demo Implementation (entry) — The primary trigger for entry, identifying the specific point where momentum shifts in the direction of the RSIOMA regime.
• ZigZag Color (Classic) (exit) — Used for trend-following exits; provides a dynamic point to close trades when a major swing reversal is detected.
• Relative Absolute Error (RAE) (risk) — Used to scale stop-loss distance. High RAE indicates price is deviating significantly from its mean error, requiring wider stops.
• Absolute Strength Histogram (ASH) (confirmation) — Secondary confirmation to ensure that the internal 'Bulls vs Bears' strength supports the MACD crossover.

Known failure conditions

• Protracted sideways markets where RSIOMA oscillates around 50 and ZigZag repaints frequently.
• RAE values collapse toward zero, leading to extremely tight stop-losses that are hit by spread/slippage.
• Asset exhibits mean-reverting behavior where MACD crossovers consistently lead to price reversals.

Explore the full interactive blueprint, parameter ranges and evidence on WOBR StrategyVerse, or generate this strategy as an MT4/MT5 Expert Advisor with QuantMogul AI Engine.