EMA bands + leledc + bollinger bands trend following strategy v2

The EMA bands + leledc + bollinger bands trend following strategy v2 tool is a comprehensive trend-following system designed to capture breakouts from specialized EMA high/low bands while incorporating various exhaustion signals for early exits and counter-trend opportunities. It aims to minimize "choppy" market noise by entering trades only when price breaks through EMA bands derived from candle highs and lows rather than standard closes.

Usage

The strategy is primarily used as a positional trend-following system. Users can enter long positions when price breaks above the "middle" EMA bands and short positions when it breaks below. To refine performance, several exit and entry modes are available:

• Trend Entries: Standard breakouts above/below middle bands, with an optional slow EMA filter to ensure trades align with the long-term trend.
• Early Exits: To avoid "leaving money on the table," users can enable exhaustion-based exits such as Leledc bars, Bollinger Band exhaustion, or Buy/Sell zone failures.
• Re-entries: The "middle EMA band bounce" feature allows for re-entering a strong trend if price wicks into the bands without a full candle close.
• Counter-Trend Scalps: For ranging markets, the script can enter mean-reversion trades when price reaches extreme overextension zones, typically filtered by Leledc or Bollinger Band signals.

Details

The core of the strategy relies on EMA bands calculated from candle extremes. By using the high EMA for long breakouts and the low EMA for short breakdowns, the script provides a buffer against minor price fluctuations.

The exhaustion logic includes:

• Leledc Bars: A price action indicator that identifies exhaustion after a specific number of directional closes and price extremes.
• Bollinger Band Exhaustion: Triggers when price closes back inside the bands while RSI is in overbought or oversold territory.
• Buy/Sell Zones: Calculated as multiples of the EMA bands or Keltner Channels to identify extreme overextension.
• Volatility Filter: A BB-Keltner squeeze filter can be enabled to avoid entering trades during periods of low volatility.

Settings

Open Conditions

• EMA Length: Sets the lookback period for the core middle bands.
• Enable breakout (Long/Short): Toggles the primary trend-following entry signals.
• Enable middle EMA band bounce: Allows re-entry on wicks into the band area.
• Use slow EMA filter: Requires price to be on a specific side of a higher-period EMA before entering.

Close Conditions

• Close on crosses: Determines if positions close at the nearest band, opposite band, or after a delay.
• Delayed close no. of bars: Number of candles allowed inside the bands before a trend is considered dead.
• Close on Leledc/BB/BuySell: Toggles for various early exit exhaustion signals.

Counter Trade Settings

• Enable counter-trend trades: Allows the strategy to take mean-reversion trades against the EMA bands.
• Trigger: Choose between Leledc or BB Exhaustion for counter-trend entries.
• Stop-loss %: Sets a flat percentage stop-loss specifically for counter-trend trades.

Exhaustion & Volatility Settings

• Bollinger Bands/RSI Parameters: Adjusts the sensitivity of the BB exhaustion exit.
• Leledc Settings: Configures the volume requirements and bar counts for Leledc signals.
• BB-Keltner Squeeze: Configures the volatility filter to prevent trading in flat markets.

FAQ

How do I use the counter-trend feature?

Enable the counter-trend trades in settings and select a trigger (Leledc or BB Exhaustion). It is highly recommended to set a stop-loss for these trades as they operate against the primary trend.

What timeframes work best?

The strategy is versatile, but lower timeframes (under 1H) often benefit from longer EMA lengths (up to 1000), while higher timeframes (4H and above) generally perform better with shorter EMA lengths like 21 or 34.

How do I access EMA bands + leledc + bollinger bands trend following strategy v2?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.