Recursive Momentum Regime Strategy

Family: trend_following · Regime: trending · Complexity: high · Asset classes: FX, Equity Indices, Commodities · Timeframes: H1, H4

Thesis

Recursive smoothing effectively isolates the primary market trend by filtering out high-frequency noise, while the TDI confirms that current price action is backed by sufficient volatility and momentum to overcome the inherent lag of the recursive calculation. The edge lies in entering only when 'deep' trend (Recursive MA) and 'fast' momentum (TDI) align, and exiting when the short-term momentum (RSI) reaches extreme exhaustion.

Components

• Traders Dynamic Index (TDI) (regime) — Serves as the volatility and sentiment filter; ensures the trend is supported by momentum above the 50-level and within expanding volatility bands.
• Recursive Moving Average Unlimited (direction) — The multi-iterative smoothing provides a 'core' trend direction that ignores minor noise, acting as the primary bias.
• Arrows Indicator Template (entry) — Acts as the execution trigger when the Price crosses the Recursive MA Trigger while the TDI regime is favorable.
• Relative Strength Index (RSI) (exit) — Provides a mean-reversion exit signal once the trend reaches a point of exhaustion (overbought/oversold).
• Average True Range (NNFX Version) (risk) — Determines stop-loss distance and position sizing based on current market volatility to normalize risk across pairs.

Known failure conditions

• RMAU fails to react to a V-shaped recovery, leading to large drawdown.
• Price enters a tight range where TDI oscillates across the 50-line repeatedly (whipsaw).
• Volatility collapses below the ATR threshold, making spreads a significant portion of the stop-loss.

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