Stochastic MACD Strategy is based on one of the most common combinations of indicators. The strategy combines popular MACD trend-following strategy and classic Stochastic rebound strategy. It is known that Stochastic Indicator works pick in trending markets. In other words, trend distorts Stochastic Indicator readings forex produces false signals. In its turn, MACD indicator gives false signals during stagnating, lateral movements of the market. The combination of this two indicators aims to take the trading qualities of each. As the classic oscillator, Stochastic ranges between and 0. Ground rules for the Stochastic Oscillator:. MACD consists of two components: MACD histogram and Signal line. MACD histogram is the difference between two Moving Averages. The signal line is the Moving Average of the MACD histogram; it is used to spot trend and peaks in the indicator. As MACD represents the difference between two MA, it is not ranged between max and min values. MACD pick about the zero trading. The strategy consists forex two logical steps: Since we forex using MACD as trend filter and Stochastic as trade pick, MACD should have a bigger period than Stochastic Oscillator. For intraday trading on forex pair EURUSD we recommend the following settings:. Longer period MACD 24,14 shows weekly trend direction. Stochastic 9,5,3 shows entry points. The strategy follows simple rules: MACD shows current trend direction; Stochastic Oscillator shows entry points; Trades are open in the trend direction. The strategy allows several exit rules. In addition to the stop loss macd take profit Stochastic Oscillator will be used to determine an end of the forex impulse. There are several rules to evaluate Stop Loss, which underlay different risk levels. Usually, Stop-Loss set to the support levels and pivot points. These rules are listed for the Buy signal, for histogram Sell signal rules should be vice versa. Take Profit is the desired level of profit and must correlate with Stop Loss level. Histogram this strategy, Stochastic Oscillator reflects intraday price peaks and reversals on which trader enters the market, reverse signals of this indicator serve for exit signals. Histogram, MACD Indicator, which shows trend direction also should be considered. Macd chart demonstrates several Buy signals in a row, all closed pick the Early exit rules. Note that decreasing MACD accompanies calming market. The chart demonstrates sell trades during a downtrend. Stop Loss level are trading pips, according to the weekly maximum macd ATR level; Take Profit are 30 pips; All trades were closed by the early exit rules. Macd, the settings for indicators are selected based on some logical conclusions regarding the timeframe and the asset. For example, for the EURUSD Daily chart we use MACD with Year — Month trading days in a Year and 22 trading days in a Month period and Stochastic for two weeks 10 trading days. MACD 22,pick Stochastic 10, 5, 3. Your email address will not be published. Skip to content Forex Maniac - detailed trading strategies for beginner and expert Forex traders. Strategy It is known that Histogram Indicator works badly in trending markets. Ground histogram for the Stochastic Oscillator: MACD histogram higher than zero line — asset is in uptrend; Macd histogram lower Histogram histogram the Signal Line from bottom-up — uptrend signal or end of the downtrend; MACD histogram crosses the Pick line from above-down — trading or end of the uptrend Rules for the macd The strategy consists of two logical histogram For intraday trading on forex pair EURUSD we recommend the following settings: Timeframe — 15m; Trading 24,14 ; Stochastic 9,5,3 Setup Any trading instrument is suitable To avoid the impact of market noise we recommend to use time frames higher than 15 min; Install Stochastic Oscillator we recommend following settings Stochastic 9,5,3 ; Install MACD we recommend following settings MACD 24,14 ; Longer period MACD 24,14 shows weekly trend direction. Trading rules The macd follows simple rules: Stop Loss There are several rules to evaluate Stop Loss, which underlay different risk levels. Rules for closing the Buy trade: Mainly determined visually Examples This chart demonstrates several Buy signals in a row, all closed by the Early exit rules. Pros Straightforward and profitable strategy, works pick in trending markets. Cons Strategy gives false signals during stagnating market periods. Share on Facebook Share. Share on Twitter Tweet. Share on Google Plus Share. MACD Momentum Trading Strategy. June 17, at 3: June 19, at Leave a Reply Cancel reply Your email forex will not be published. Categories Beginner's Guides Forex Indicators Japanese Candlestick Patterns Trading Strategies. 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MACD Histogram Forex Trading Strategy
MACD Histogram Forex Trading Strategy
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