MACD SWING TRADING STRATEGY

"Trading the H4 Timeframe using MACD Histogram"


TRADING STRATEGY

Style: Swing Trading Strategy

Name: MACD Swinger Trading Strategy

FINANCIAL ASSETS

Forex Majors | Metals and Energy | Stocks | Indices



TIMEFRAME

H4 timeframe (4-Hour)



INDICATORS & SETUP

This strategy is applied using solely the Moving average convergence divergence (MACD).

MACD Settings

The default MACD settings are used:

  1. Fast EMA: 12
  2. Slow EMA: 26
  3. MACD SMA: 9

Note: You can alternatively combine MACD with RSI or Stochastic in order to confirm further your trading signals

 



TRADING SIGNALS

This is how you may implement the MACD Swinger Strategy. This MACD strategy is very simple and can be used by anyone.

 

■ (↑) Long Trades

1. The MACD histogram turns from negative to positive.

2. As the MACD histogram in moving from positive to negative, we must wait for 4 positive MACD bars.

3. When the 4th bar is confirmed we enter a long trade.

4. The Stop-Loss is set to the lower price on the chart that corresponds to the recent MACD histogram low.

■ (↓) Short Trades

1. As the MACD histogram is moving from positive to negative we prepare a short-trade.

2. We must wait for 4 negative MACD bars.

3. When the 4th negative bar is confirmed we enter a short trade.

4. The Stop-Loss is set to the higher price on the chart that corresponds to the recent MACD histogram high.



TRADING ORDERS

Take Profit: The average take profit in H4 timeframe is 300-400 pips

Stop-Loss: The average stop-loss in H4 timeframe is 150-200 pips

Profit/Loss Ratio: 2


CHART: MACD Swinger


 

 

FIND ALSO: ► EA BUILDER TESTER | ► GET STARTED WITH FOREX | ► TRADE SYSTEMS

STRATEGIES: ► DAY-TRADE | ► SWING-TRADE | ► SCALPING STRATEGY | ► BINARY STRATEGIES

FOREX RATINGS: ► DIRECTORY | ► TRADE SPREADS | ► FOREX REBATES | ► FOREX SCALPING | ► SWAP RATES | ► FUNDS SAFETY

 

MACD Swinger Trading Strategy

ForexExperts.net ©

News-Trading Strategy for Binary Option Traders

News-Trading is a fundamental-analysis strategy that is based on the upcoming economic calendar.

News-Trading focus on short-term periods and can be used for trading 1 minute, 2 minutes and 5 minutes binary options (Turbo Options). Most of the news releases have a short-term effect but there are also news releases with a long-term effect on global markets. The mission for every News-Trader is to track important news releases and trade the right direction of the news impact.

 

What is Event-Trading and Market Expectations all about?

Every major economic, social, politic or military event has a particular influence on the global financial markets. Even a weather forecast can highly influence the global markets (especially energy assets). Some events have a tremendous effect on financial markets while some other events have a minor effect. What is important isn’t just the event itself -It is of equal importance what the market really expects about certain events.

Three Factors affecting News Trading

■ The Nature and the Significance of the News Release (For example an important macroeconomic event such is an interest rate cut)

■ Market Expectation about this Event / News Release

■ The difference between the Market Expectations and the Actual Event

What means Market Expectations?

When we are referring to market expectations we are mainly referring to the results of the research of specialized analysts. These analysts who may work for a Financial Company, a Governemnet Body or to be completely Independent have the ability to influence all kind of market participants.

Example of an Important Macroeconomic Event

Let’s suppose that our market is Forex and the market expects that the ECB (European Central Bank) will cut Euro interest rates by 0.25% (hypothetically 0.50% currently).

Suddenly ECB doesn’t cut the Euro rates but in addition it presents a scenario of future interest rate increase based on inflationary concerns.

Can you imagine what happens next?

Euro against the other Majors, for example against USD, will probably gain 2,000 pips in the next few minutes. In the following chart you may observe the effect of important news on EURUSD.

Identifying Chart Patterns

Strategy’s Outlook:

Pattern recognition is a very popular trading strategy based on technical analysis chart patterns. Financial markets tend to move in certain patterns and those traders capable of identifying some of these patterns may increase significantly their likelihood of winning. Identifying patterns as a method can be combined with other trading strategies and be used to confirm the entry/exit signals of other trading methods. Trading patterns recognition as a method is a much more reliable method in mid-term and long-term trading periods than in short-term periods.

What is a Chart Pattern?

A chart pattern means a distinct price formation presented on the chart. There are many different types of chart patterns, in this article, you can find the most important patterns. Patterns can not forecast the future but it can help traders increase their likelihood of winning. In general, we can distinguish two main types of Chart Patterns:

(1) Continuation Chart Patterns

(2) Reversal Chart Patterns 

1. MAJOR CONTINUATION CHART PATTERNS

Definition: Continuation chart patterns signaling that a price trend will continue.


 

1.1 Cup & Handle Chart Pattern

Cup & handle formation suggest that a price trend has paused for a while but it will not probably be reversed. When this formation is confirmed then a price trend becomes even stronger.

Timeframe: Cup & Handle pattern can be best identified in charts from 1-month chart to 1-year.

The ‘Marida’ Type of Traders

Many Binary Options Traders think that they can become rich in a couple of days, this kind of traders are what is called in my country “The Marida” traders. Actually, Marida is a tiny kind of fish that feeds a lot of undersea predators. Either you are trading Binary Options or any other kind of financial instrument (Shares, Forex or CFDs) never join the Merida team.

A Winning Strategy
 
True Vs False Instinct
 
A true trading instinct derives only from experience. If you are a beginner and you feel like having an instinct you are just wrong. It is just a game of your brain, it makes you feel have something just because it needs to boost your confidence or because it is just bored and needs some adrenaline to flow into your veins. Confidence will not make you rich in the future, neither adrenaline, what can make your rich in the future is knowledge, experience, and strategy.
Avoid false instincts and try to concentrate into facts and figures while doing your math. If you are a beginner, use a demo account, and by this way, buy some trading experience for free.
In order to define a winning strategy, we must first understand what I call as the ‘Trading Triangle’. The ‘Marida team’, mentioned before, has usually no strategy and ignores completely the following triangle.
 
Shape: The Trading Triangle
What characterizes the above Trading Triangle is velocity. Each time you push one side (Performance, Risk or Time Frame) the other two sides are widening. So, if you want to achieve high profits (Performance) in short periods then your trading risk is expected to climb. From the other hand, if you seek to reduce your portfolio risk then your expected return should be lower and your time frame should get wider.

Based on this simple model is very easy to understand why you need to widen your time frames to trade any market. A wide trading time frame maximizes your profit potential while it minimizes your overall trading risk. Proof comes from statistics, 99% of all day traders are loosing their total capital after some time. Simply because when you are trading on a daily basis, your trading cost (commissions etc) is getting very wide and that means your profit potential is minimized. It is better not to become a day-trader. Take long-term positions and make clear decisions, always avoid time pressure.


Strategy -The Trading Triangle
George M. Protonotarios
ForexExperts.net

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