the best macd trading strategy

The MACD Trend Following Strategy, as the describ suggests, is peerless of the unsurpassed trend chase strategies to use. MACD stands for moving average convergence divergence. As moving averages change over time, it will exist up to to decide whether they are generally converging operating theater oblique. With this knowledge in hand, the MACD Veer Following Scheme makes information technology much easier to predict near-future price movements. This strategy is similar to the movement following scheme we developed antecedently.

Flush if you're wrong on a trade, single of the most important features of trend following strategies is that you can ordinarily limit your losings. This is because, ultimately, the market will reverse and summarize the tendency. But more importantly, it maximizes your potential profit at the same time. This scheme is enclosed in our complete list of the top trading strategies compiled happening the internet.

Our team hither at Trading Strategy Guides.com strives to provide you with the unexceeded trading strategies.

The MACD Trend Chase Strategy workings best on the higher time frames, the like the 4h chart or the each day graph. So, if you'Ra a swing trader, this is the perfect strategy for you. We developed this trend following strategy to show the world how to decently use the MACD indicator. Our goal is to show how accurate this tool john be in forecasting market turning points.

Now, if you're a day trader and don't equivalent retention positions overnight, don't worry. We've got your back. Our ducky day trading scheme, Day Trading Price Action- Simple Price Action Strategy, has attracted a lot of interest from the trading community.

Now, let's move on to the incredible MACD strategy we industrial for our traders. We will show you how to use MACD effectively, what a reliable trend indicator looks like-minded, and a super profit index number. You'll also learn wherefore we think the MACD indicator is the best trend following indicant. Hera is another strategy called, The PPG Forex Trading Strategy.

What is the MACD indicator used in this trading scheme?

The beauty of the MACD Trend Tailing Strategy is that it only requires the usance of one simple tool: the MACD index number. Away the way, this is among the most popular Forex indicators.

Without further bustle, LET's move directly to the point and:

• Delimitate what is the MACD indicator.
• How the MACD indicator plant.
• What MACD indicator stage setting to use.

The MACD is one of the nigh powerful trend following and momentum indicant. The MACD is a commonly ill-used technical indicator. A stated, the acronym stands for Moving Average Convergence Divergence.

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In simple price, a trend-following index number helps you to determine the overall direction of the market. Whether it is up (bullish discrepancy) or down (bearish divergence). Happening the other hand, a momentum indicator seeks to determine the stop number of the tendency. Put down them together and you have the perfect combination for a trend following strategy.

A picture is worth a thousand words. So, here is how the classical MACD indicator looks like on a chart:

The MACD give the axe allow an earlier indication that an OLD sheer is about to remainder and a NEW trend is about to start. The MACD manipulates its moving averages in a rather clever way. This indicator is especially useful in forex trading strategies. It tail end signal changes in trend more finisher to when they actually occur. Please have got a look at the chart example below to look the power of the MACD indicator.

So, how does IT work?

Fountainhead, the MACD's impressive averages and histograms (see graph down the stairs) are derived from the price chart. They are calculated using a recipe, which adds greater weight unit to the most recent price movements data.
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Remember? Price is king!

Our favoritePrice Legal action Pin Relegate Trading Strategy is a great introduction to what a pure price action scheme should look like-minded. It can glucinium also victimized in combination with the MACD Trend Following Strategy for a high success rate.

What about the index number setting?

The preferred settings for the MACD indicator are the default settings.

See below:

MACD Settings

Let's move forward to the well-nig important part of this clause: the buy/sell rules of the MACD Trend Following Strategy.

Now, before we croak any advance, please strike a man of paper and a pen and note down the rules.

LET's puzzle started…..

Note** Some reported to us that the Default MACD indicator on MT4 does not undergo these two lines like you figure in our good example. You butt find a version for the strategy here on Forex Mill:dannbsp;https://www.forexfactory.com/showthread.pHp?t=69409

MACD Trend Pursuing Strategy

(Rules for Adannbsp; Buy Patronage)

Step #1: Wait for the MACD lines to evolve a high high followed by a lower high swing point.

This is an unorthodox approach to technical analytic thinking. But, we at Trading Strategy Guides.com are disparate. We don't mind doing uncomfortable things if that's what it takes to deliver the goods in this byplay.

First, let's envision how an unquestionable swing point really looks on the MACD indicator:

The first rule of thumb to recognize a swing high on the MACD index is to take the price chart if the respective currency pair is doing a swing over high the same equally the MACD indicant does. A higher stinky is the highest cu price point connected a chart and must be higher than all previous swing commanding points. While a lower high happens when the get around channelize is lower than the early swing ou high item.

This brings us to the next rule of the MACD Trend Following Strategy.

dance step #2: Connect the MACD line swing points that you have identified in Step #1 with a trendline.

This stone's throw is quite reniform, rectify?

See below, how your chart should look like after you aright identified the swing points on the MACD indicator and connected them through a trendline.

At this point in time, we really ignored the MACD histogram because much of the info contained aside the histogram is already exhibit up aside the touching averages. Look at the price action now and equate it to our MACD trendline we Drew early. We can distinctly notice that the MACD contains the price action much better and reflects the trend much clear.

But, at this point, we're still not done with the MACD indicator, which brings us to the evaluative part of our MACD Slew Following Scheme.

Step #3: Wait for the MACD line to break above the trendline. (Entry at the market value as soon Eastern Samoa the MACD line breaks above).

When the MACD describe (the blue line) crosses the signal stoc (the orange line) it's an early signal that a optimistic sheer power start. However, if trading would be that easy we would all be millionaires, right? And that's the conclude why our MACD Trend Following Scheme is so unique.dannbsp;We'ray not alone waiting for the MACD moving averages to get over over but we also have our else criteria for the price execute to bust up aka the trend line we drew early.

This is a intelligent way to filter out the false MACD signals, but you have to equal equipped with the right mindset and give patience until all the piece of the puzzle come together. If you were to trade just based on the MACD crossover o'er time you'll lose money because that's not a reliable strategy. Simply if you expend the MACD indicator along with other criteria such as what this strategy tells you to make out, you testament find great trade entries on a consistent basis.

Step #4: Use Guardian Stop Expiration Order. (Stead the SL below the all but Holocene epoch swing down in the mouth).

Straightaway, that you already know how to enter a trade at this point you experience to learn how to manage risk and where to place the SL. After all, a trader is fundamentally a risk manager.

You want to place your stop expiration below the well-nig recent low, similar in the figure below. But earn sure you add a buffer of 5-10 pips away from the depression, to protect yourself from possible false breakouts.

Did you notice?

The MACD Trend Next Strategy triggered the buy signal right at the get down of a new trend and what is most grand the timing is many than perfection. We bought EUR/USD the same day the bullish divergence veer started.

Today, what this has to do with the SL?

Basically, a swell entry price means a smaller stop loss and in the end it agency you'll lose a lot inferior comparing it with the profit potential, thusly a positive risk to reward ratio.

Step #5: Take Lucre when the MACD crossover happens in the opponent direction of our entry.

Knowing when to take profit is as important atomic number 3 knowing when to enter a trade. Notwithstandin, we want to work sure we father't use the comparable trading technique for our entry order. When the MACD line (the blue crease) produces impressive line crossovers (the orange blood line)we want to close the position and take choke-full profits.

Before winning profits, it's important to wait for the candle incommunicative – either the 4h or the daily taper – depending on the clock time frame you trade so you make trusted the MACD crossover actually happens.

Note** The above was an example of a buy patronage using the MACD Trend Tailing Strategy. Use the exact same rules – but in setback – for a sell trade. In the envision below you can see an actual SELL trade good example using the MACD Tendency Next Strategy.

Have a look:

We've practical the same Step #1dannbsp;and Step#2dannbsp;to help us draw the trendline and followed Step #3dannbsp;to trigger our patronage

Conclusion:

The MACD Trend Following Strategy is a very simple trend-following strategy and yet a very profitable strategy at the same time. As the saying goes, "The trend is your friend" and no matter if you're just starting as a Forex trader surgery you'rhenium already an established trader life is much easier when trading in the direction of the path of least resistance rather than fighting the trend which is a loser's game.

The success slow the MACD Trend Following Scheme is derived from one sword-shaped principle: momentum precedes price. Our team up at Trading Scheme Guides.com doesn't claim to be perfect, but we have a solid intellect of how the market works. For those of you who are not fans of higher time frames and swing trading, we recommend the"Day Trading Price Action- Simple Price Action Strategy"dannbsp;which can be more eligible for your trading panach.

Thank you for reading!

Please leave a comment downstairs if you have some questions nearly MACD Trend Following Strategy!

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If you'd like to learn more about moving averages, including mathematical notation moving averages, click here.

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the best macd trading strategy

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