Recursive Volatility Trend Follower

Family: trend_following · Regime: trending · Complexity: medium · Asset classes: Equities, FX Major Pairs, Crypto Majors · Timeframes: H1, H4, D1

Thesis

Market trends exhibit 'persistence' once momentum and volatility align; this strategy captures the meat of a trend by using Heikin-Ashi for noise reduction and Recursive Moving Averages to identify the core momentum vector, while leveraging Parabolic SAR for adaptive risk management.

Components

• Heikin-Ashi Candles (regime) — Acts as the primary regime filter to ensure trades are only taken in the direction of the smoothed trend, reducing noise from minor price fluctuations.
• Rate of Change (ROC) (direction) — Provides the momentum confirmation; price must be accelerating in the direction of the Heikin-Ashi trend before an entry is considered.
• Recursive Moving Average Unlimited (entry) — The primary trigger; the crossover of price against the composite trigger line signals an entry after filtering through regime and direction.
• MACD (exit) — Used for trend-exhaustion exits; when the MACD signal line crosses back or histogram reverses, it indicates the momentum has faded.
• Parabolic SAR (risk) — Provides both the initial stop-loss placement and an accelerating trailing stop to lock in profits during trending moves.
• Bollinger Bands (volatility_filter) — Used as a volatility filter (the Squeeze); ensures the strategy doesn't enter during low-volatility 'noise' or 'dead' zones.

Known failure conditions

• Persistent MACD histogram divergence without significant price retracement leading to premature exits.
• Extended periods of low volatility (Bollinger Squeeze) resulting in zero trade execution for months.
• Recursive MA overshoot during V-shaped recoveries causing entries at the very end of a trend.

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).