LBR's Game Theory - EMA StrategyLinda Bradford Raschke's Game Theory EMA Strategy:
Overview:
This strategy combines EMA crossover structure with a momentum-based utility edge model inspired by basic game theory concepts. The objective is to participate only when directional momentum suggests one side of the market has a measurable advantage.
Core Logic:
Structure Shift:
A fast EMA crossing a slow EMA signals a potential momentum transition.
Trend Alignment:
Trades are only taken in the direction of a higher timeframe trend (Trend EMA).
Utility Edge Model:
Momentum is normalized using RSI to approximate directional “utility.”
When RSI is above 50, buyer utility is positive.
When RSI is below 50, seller utility is positive.
If the difference between buyers and sellers is too small (equilibrium zone), trades are avoided.
Trend Strength Filter:
Optional ADX filter ensures trades occur in expanding trend conditions.
Risk Management:
Default Properties:
• Initial Capital: 10,000
• Risk per trade: 2% of equity
• Risk–Reward: 1.8 : 1
• Commission: 0.05%
• Slippage: 1 tick
• No pyramiding
Position size is dynamically calculated:
Position Size = (2% Equity) ÷ Stop Distance
Stops and targets are ATR-based to adapt to volatility.
Intended Use:
Best suited for:
• Trending instruments (Forex majors, Indices, Gold, Crypto)
• Multi-year datasets for proper statistical evaluation
This strategy reacts to structural and momentum shifts. It does not predict future price movement.
Past performance does not guarantee future results.
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