The 500 is indeed an arbitrary value, for keeping the example simple. In a real system you would check how the 500 affect the result, and whether the system becomes more robust when the parameter is optimized.
Thanks for your input jcl. I have tried to understand your advice and read a bit more meanwhile and tried different indicators that try to detect when the market is not in 'trend mode' but without success.
I don't want to be spoon-fed but could you elaborate a bit more how to 'check how the 500 affect the result'? , the only thing I can think of is a signficance statistical test but even in that case I am lost in how to go about performing it or which one should I use.
