The Double Exponential Moving Average does give faster entry signals, but those signals are only good when the movement is really good. But when the price movement is slow, the Double EMA will give a decent amount of false signals in a row. For comparison, this is a chart where the price is in an uptrend. At one point, when the price stopped making higher swing highs for a while, the Weighted Moving Average didn’t give any new signals. But since the Double EMA reacts to everything faster, it gave 4 false signals in a row. Since the market doesn’t move infinitely with the same momentum, the faster signals that were supposed to be the main reason for a higher win rate, were actually the reason for giving false signals in the slow-moving markets. The Weighted Moving Average was the sweet spot between “the good fast” and “just early false signals”, and that’s why Weighted Moving Average actually improved the win rate of the Golden Cross Trading Strategy. The Double Exponential Moving Average, on the other hand, got a 42 percent approximate win rate with a 1.5 to 1 Reward Risk Ratio, which is not a worse win rate like other strategies we have seen so far, but it is also not as high as some of the best trading strategies we have seen on the Trading Rush Channel. The Original Golden Cross also had a 42 percent approximate win rate, but this time, the profit graph in the Trading Rush App looks a lot better than the profit graph of the SMA Golden Cross.
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The DEMA Golden Cross Trading Strategy gets a TR Score of 22.2 out of 50, just like the Original Golden Cross, but this time it loses points in reliability and quality of trades categories. If you come to the Trading Rush Website, it ranks 25th from the top, just below the Original Golden Cross Trading Strategy, and above the Awesome Oscillator second strategy.
The Best Use of the Double Exponential Moving Average is not to enter trades, but to book better profits by using it as an exit indicator, just like we saw in the previous video. Check out that video on the Trading Rush Channel to learn more. That’s all!