MACD Trend Forex Trading Strategy
The MACD Trend forex trading strategy scans the market for high probability buy and sell trading signals on any pair and timeframe.
The strategy consists of 3 technical indicators:
An oscillator (MACD) has the primary function of spotting short-term overbought and oversold conditions in the market.
Two custom built MT4 indicators which are trend indicators.
MetaTrader4 Indicators: MA_in_Color.ex4 (Inputs Variable Modified; MAPeriod=28), HAMA_.ex4 (Default Setting), MACD.ex4 (Default Setting)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day
Recommended Trading Sessions: Any (London, New York, Tokyo)
Currency Pairs: Any pair
Buy Trade Example
Long Entry Rules
Initiate a buy entry is the following indicator or chart pattern gets displayed:
- If the green MA_in_Color.ex4 custom indicator line gets aligned somewhat below the price bars as seen on Fig. 1.0, a buy signal is said to be looming.
- If the blue rectangular shaped bodies of the HAMA_ custom indicator gets positioned somewhat below the candles as shown on Fig. 1.0, the overall sentiment is said to be bullish i.e. a signal to go long.
- If the dark green histogram of the MACD MT4 indicator break and stays above the 0.00 level as illustrated on Fig. 1.0, a buy signal is imminent.
Stop Loss for Buy Entry: Place stop loss below immediate support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If the line of the MA_in_Color.ex4 custom indicator turns red while a buy signal is ongoing (refer to Fig. 1.0), an exit or take profit is advised.
- If the rectangular shaped bodies of the HAMA_ custom indicator turns red during a bullish trend, an exit or take profit will suffice.
- If a dark green histogram of the MACD MT4 indicator pops up below the 0.00 level, an exit or take profit will suffice.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the red MA_in_Color.ex4 custom indicator line gets aligned somewhat above the price bars as depicted on Fig. 1.1, a sell signal is said to be imminent.
- If the red rectangular shaped bodies of the HAMA_ custom indicator gets positioned a tad above the candlesticks as shown on Fig. 1.1, the general sentiment in the market is said to be bearish i.e. a signal to go short.
- If the dark green histogram of the MACD MT4 indicator break and stays below the 0.00 level (check Fig. 1.1), a sell signal is in the offing.
Stop Loss for Sell Entry: Place stop loss above immediate resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the line of the MA_in_Color.ex4 custom indicator turns green when a sell signal is running, an exit or take profit is recommended.
- If the rectangular shaped bodies of the HAMA_ custom indicator turns blue during a sell trigger, an exit or take profit will do.
- If a dark green histogram of the MACD MT4 indicator pops out above the 0.00 level, an exit or take profit is sufficient.
Sell Trade Example
About The Trading Indicators
The MA_in_Color.ex4 is an exponential moving average with period 14 and is a trend following indicator that adds more weight to the latest price data.
The HAMA_.ex4 indicator deploys a 2-color visualization (red and blue) scheme to deliver sell and buy signals respectively.
The MACD is an oscillator that combines the Fast EMA (12), Slow EMA (26) and the SMA (9) in one technical study.
Developed by Gerald Appel in 1979, Mac D, as it is also called is a common and multipurpose tool deployed in identifying and following strong trends, and also spotting trend reversals.