Rasta Long/Short

Rasta Long/Short

Rasta Long/Short is a rule-based, state-flip trading strategy designed for structural market analysis and systematic behavior study. The strategy models directional regime changes using the relationship between a fast EMA and a smoothed reference line, with optional higher-timeframe trend filtering and clearly defined risk boundaries.

The system operates as a binary state machine: price action is interpreted as either bullish or bearish based on crossover dynamics, and positions flip accordingly. The objective is not prediction, but consistent response to confirmed structural shifts in momentum.

Core Logic Overview

At its foundation, the strategy compares:

An EMA of the selected source, and

A smoothed version of that EMA (SMA / EMA / RMA / WMA selectable).

Crossovers between these two lines define directional transitions:

A crossover to the upside signals a bullish state.

A crossover to the downside signals a bearish state.

These transitions are treated as state changes, not discretionary signals, allowing the strategy to alternate cleanly between long and short exposure or operate in restricted modes.

Trade Modes

The strategy supports three execution modes:

Long Only – participates only in bullish regimes.

Short Only – participates only in bearish regimes.

Long + Short – flips continuously between both states.

This flexibility allows the same framework to be studied across different asset classes, market conditions, and directional biases.

EMA 8/21 Trend Filter (Optional)

An optional EMA 8 / EMA 21 filter can be enabled to gate bullish entries only, while bearish logic remains ungated. This asymmetric design reflects the reality that many markets exhibit different behavior on the upside versus the downside.

An adaptive release mechanism is included:

If the EMA 8/21 filter flips bullish while the internal state is already bullish, the strategy can enter immediately rather than waiting for a new crossover.

This helps reduce missed transitions during strong trend resumptions.

Execution Model

Signals are evaluated in real time with per-bar locking to prevent duplicate actions.

A bar-close backup path is included to ensure structural flips are not missed.

Position management enforces one active position at a time.

All flips are handled explicitly (long → short → long) to maintain clean state transitions.

Risk Management

Risk is handled through independent fixed stop-loss levels for long and short positions, defined as a percentage of entry price. These stops are:

Direction-specific

Always active once a position is open

Visualized directly on the chart (optional)

The strategy does not rely on profit targets or curve-fitting logic. Risk control is explicit and transparent.

Visual Structure

To support visual analysis, the strategy includes:

EMA and smoothed reference plots

Optional colored “fog” between lines to highlight directional state

Optional structural “DNA rungs” drawn between the EMA and smoothed line to visualize compression, expansion, and regime shifts

Optional labels marking state transitions

All visual elements can be enabled or disabled independently.

Intended Use

This script is provided as a research and educational framework for studying trend structure, state transitions, and systematic execution logic. It is suitable for:

Market structure analysis

Strategy behavior comparison across assets and timeframes

Educational review of state-based trading systems

It is not a prediction tool and makes no claims regarding profitability or performance.

Notes

Results will vary by market, timeframe, and configuration.

Users are encouraged to study behavior across different conditions rather than relying on a single configuration.

All parameters are fully adjustable to support experimentation and learning.