Game Theory EMA with an alternate strategy by uzair2join

By uzair2join

Performance Metrics

Description

Game Theory EMA Strategy – Trend-Following with Utility & Nash FiltersThis open-source strategy combines classic EMA crossover trend-following with simplified game-theory-inspired decision filters to improve entry quality and reduce whipsaws.Core ConceptTraditional EMA strategies often suffer from false signals in ranging or low-conviction markets. This version adds lightweight game-theory proxies:- **Expected Utility** (EU): estimates relative strength of buyers vs sellers using RSI momentum, volume weighting, and trend bias- **Nash Equilibrium Proxy**: flags when buyer/seller forces are roughly balanced (low utility gap) → avoid trading in equilibrium (indecision/chop)- **Momentum Strength Ratio**: measures recent bullish vs bearish candle dominanceThese act as confirmation layers on top of EMA crossovers + trend filter + standard technical filters (ADX, volume, RSI), creating higher-confluence entries.Key Components & Logic1. EMA Signals - Fast EMA (default 9) crosses above Slow EMA (21) → potential long - Fast crosses below Slow → potential short - Price must be above/below Trend EMA (50) for directional bias2. Game Theory Filters (optional) - Buyer/Seller Expected Utility: combines RSI position, volume weight, trend direction - Utility Gap: absolute difference between buyer & seller EU → requires minimum gap (default 0.15) - Nash Equilibrium: low gap ( SMA × multiplier) - RSI not in extreme zones (20–80)4. Risk & Trade Management - ATR-based stop (default 1.2× ATR) - Fixed R:R target (default 1.5:1) - Max trades per day, max daily loss %, optional time filter - Multiple exit reasons: target hit, trend break (EMA slow), equilibrium, time-basedVisuals & Dashboard- Fast (blue), Slow (red), Trend (orange) EMAs- Green/red background for up/down trend- Yellow background during Nash equilibrium (indecision zone)- Entry triangles + stop/target lines- Top-right info table showing: - Position, Trend, ADX strength - Buyer/Seller EU, Utility Gap, Nash status - Total trades & win rate - Trades today / daily limitAlerts- "GT Strategy: Long Signal"- "GT Strategy: Short Signal"- "GT Strategy: Nash Equilibrium" (warning)Realistic Backtesting & Usage GuidelinesTo publish non-misleading results:- Initial Capital: $10,000 – $50,000 (realistic retail/futures account)- Position sizing: 1–3% equity per trade (change default_qty_value from 95%!)- Commission: 0.03–0.1% per side or $4–$10 RT per contract (futures)- Slippage: 1–5 ticks (futures/indices) or 0.5–2 pips (forex)- Dataset: ≥12–36 months on chosen timeframe (aim for 300–800+ trades)- Risk per trade: 0.5–2% max — never exceed sustainable levelsExpectations:- Best on trending instruments (NQ, ES, GC, XAUUSD, BTC, major forex) during active sessions- Fewer signals in choppy/low-volatility periods (Nash filter helps)- Drawdowns common during ranging markets — this is a trend-biased system, not reversal- News events can cause false entries — use time filter or manual discretionHow to Use1. Apply to high-liquidity symbols (NQ1!, ES1!, GC1!, XAUUSD, BTCUSD, EURUSD)2. Timeframes: 5m–1h for day trading, 4h–daily for swing3. Start with defaults: 9/21/50 EMAs, Nash & utility filters on, 1.5:1 R:R4. Trade only when multiple filters align (EMA cross + utility edge + volume + trend)5. Avoid major news or use wider stops6. Forward-test on demo for 2–3 months minimumPublish Recommendation- Use a clean chart: only this strategy, no extra indicators/drawings- Show realistic Strategy Tester results with commission/slippage applied- Screenshot during trending period with visible EMA cross, entry, stop/target lines, and info tableEducational tool — open-source for learning trend + decision-theory concepts. Not financial advice. Trading carries very high risk of loss — test thoroughly and trade responsibly.Feedback welcome — especially on utility calculation or filter combinations!

Browse all 5,900+ TradingView Pine Script strategies

View on TradingView