Forex Solid MACD Indicator & Trading System : A Good Filter System for Trend Following Trading

Best Filter System for Trend Following Trading – Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices.

Solid-MACD-Forex-Trading

 

The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

There are three common methods used to interpret the MACD:

  • MACD Crossovers – As shown in the chart above, when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting getting “faked out” or entering into a position too early, as shown by the first arrow.
  • MACD Divergence – When the security price diverges from the MACD. It signals the end of the current trend.
  • MACD Dramatic rise – When the MACD rises dramatically – that is, the shorter moving average pulls away from the longer-term moving average – it is a signal that the security is overbought and will soon return to normal levels.
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Solid MACD Indicator & Trading Rules

Solid MACD is a suitable system for trading currencies. This strategy can also be used as a good filter system for trend following indicators or momentum arrows. In the picture i show as the MACD golden template filters the momentum arrow and trend arrow.

This template can filter all arrows that you want.

  • Best Time frame : 15 min or higher
  • Currency pairs: any.

 

BUY Rules

Solid-MACD-BUY

  • Gold MACD green line
  • Golden MACD Histogram above the line MACD
  • Golden MACD + God MACD green line.

 

SELL Rules

Solid-MACD-SELL

  • Gold MACD red line
  • Golden MACD Histogram below the line MACD
  • Golden MACD + God MACD red line.

 

Money Management Tips

 

  • Avoid Trading Too Aggressively

Trading too aggressively is perhaps the biggest mistake new traders make.

 

  • Envisage Exit Points Before Entering a Position

Think about what levels you are aiming for on the upside and what loss is sensible to withstand on the downside.

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Doing so will help you to maintain your discipline in the heat of the trade.

It will also encourage you to think in terms of risk versus reward.

 

  • Don’t Trade On Tilt

At some point you may suffer a bad loss or burn through a substantial portion of your risk capital.

There is a temptation after a big loss to try and win it all back with the next trade.

But there’s a problem.

Increasing your risk when your risk capital has been stressed, is the worst time to do it.

Instead consider:

…reducing your trading size in a losing streak…

…or taking a break until you can identify a high-probability trade.

Always stay on an even keel – both emotionally and in terms of your position sizes.


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