Hey guys, welcome to another episode. This is one of the MACD strategies that has a very high accuracy and should be understood by all forex and stock traders.
So, the MACD strategy I’m going to share with you is one of the most effective trading strategies with a high success rate.
It is simple to use, applicable in almost every market, and most importantly, it generates profits. Without further ado, let’s dive right into it.
The MACD indicator is highly effective in identifying market trends. To determine an upward trend on a chart, it is important to observe an upward crossover between the MACD line and the Signal line.
For example,
- When the MACD line crosses above the signal line, it indicates upward momentum,
- While a crossing below the signal line suggests a downward momentum.
The histogram can also be used to assess the strength of momentum. A growing histogram indicates an increase in momentum, whereas a shrinking histogram implies a decrease in momentum.
To maximize the effectiveness of this indicator, it is advisable to enter a trade only when the lines cross upwards, specifically below the zero line. Entering a trade when the lines cross above the zero line is not recommended.
Similarly, for short trades, it is crucial to enter the market only when the lines are crossing downward and positioned ABOVE the zero line.
As you can see, this indicator is user-friendly and easy to understand. However, many traders face challenges by solely relying on this indicator. Let me tell you why this approach is ineffective.
Alright, now I’ll show you the most crucial secret why this strategy will bring in maximum profits based on the profit-taking strategy you apply.
The real strength of this strategy lies in placing your trades close to the 200-EMA. When the price gets near the 200-EMA, if it bounces back, the rebound will be quite significant, offering you a much higher potential risk-reward ratio, possibly exceeding 1 to 5.
That’s why it’s essential for you to constantly keep an eye on the market like a sniper when you notice the price approaching the 200-EMA zone because if it bounces, you can quickly amass wealth. Even though this technique is highly lucrative, it’s crucial to always implement strict risk management practices.
- Download “ForexWOT-MACD200EMA” (Zip/RAR File).
- Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
- Copy the “ForexWOT-MACD200EMA.tpl” file (template) to your Metatrader Directory …/templates /
- Start or restart your Metatrader Client.
- Select Chart and Timeframe where you want to test your forex system.
- Right-click on your trading chart and hover on “Template”.
- Move right to select “ForexWOT-MACD200EMA” trading system and strategy.
- You will see the “ForexWOT MACD & 200-period EMA” is available on your Chart.
While the combination of the MACD and the 200-day moving average proves highly effective when there is significant price movement, it becomes less reliable and generates false signals when the chart enters a sideways phase and loses momentum.
Price Above 200-EMA- The MACD lines are crossing upward below the zero line.
- Set a stop loss just below the 200-period EMA.
- Price Below 200-EMA
- The MACD lines are crossing downward above the zero line.
- Set a stop loss just above the 200-period EMA.
So, I just shared with you a highly effective combination of MACD and the 200-period moving average to achieve remarkable win rates.
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