BEST MACD Trading Strategy [86% Win Rate] — Transcript

Full transcript

1. 0:00MACD Strategy This MACD strategy I m
2. 0:01about to show you is one of the highest win rate  strategies you can possibly do in trading. It
3. 0:07is very easy to use, works in almost every single  market, and most importantly, it makes money. Well
4. 0:12enough talk, lets get straight into it. The MACD or the Moving Average Convergence
5. 0:16Divergence is one the most popular technical  indicators used by traders. Essentially this
6. 0:21indicator uses moving averages to find trends  in markets, and its pretty damn good at it too.
7. 0:27Now, if you re an experienced  trader, you ve probably used or
8. 0:30heard about the MACD indicator before. But the MACD indicator by itself, is just
9. 0:35alright to be honest. So, make sure you watch this  full video to see how I pair it with some other
10. 0:40indicators to make it perform so much better. First things first, let s add the MACD indicator
11. 0:46to our chart. To do that .
12. 0:58Now that we have the MACD indicator added, lets  make sure we know how the MACD actually works.
13. 1:03The MACD is made up of 4 different  components. The MACD line, the signal line,
14. 1:08the histogram, and the zero line. The MACD line which is the blue line,
15. 1:12in most cases is usually a 12 day moving  average, the signal line, which is the
16. 1:16orange line, is usually a 26 day moving average. Next we have the histogram, which represents the
17. 1:22difference between the MACD line and the signal  line. So for example, the smaller the space
18. 1:27between the two lines, the smaller the histogram  gets. The bigger the space, the bigger it gets.
19. 1:33You can also see once the MACD  line crosses above the signal line,
20. 1:37the histogram turns green and if the MACD line  crosses below the signal line it turns red.
21. 1:42And finally, we have the zero  line, which basically represents
22. 1:45the center of the MACD indicator. Now that we know the 4 components,
23. 1:49lets make sure we know how to them. The MACD indicator is insanely good at
24. 1:54finding trends in markets. How you can tell  if a chart is about to have an upward trend
25. 1:59is by looking for a cross upwards between  the MACD line and the Signal line.
26. 2:03For example, here the macd crosses above the  signal line indicating the chart is in upward
27. 2:09momentum, and here the macd crosses below the  signal line indicating it s in downward momentum.
28. 2:14You can also use the histogram to indicate  how much momentum there actually is. So,
29. 2:19if the histogram is getting bigger, that means  there is an increase in momentum. If it s
30. 2:24getting smaller, there is a decrease in momentum. So how you want to use this indicator is by when
31. 2:29the lines cross upward, but only if they cross  below the zero line. If they cross and its above
32. 2:35the zero line you wouldn t enter a trade. It s the same thing with shorting,
33. 2:40you only enter a short trade if the lines are  crossing downward, and is ABOVE the zero line.
34. 2:45So as you can see, this indicator is extremely  easy to use. But the problem most traders
35. 2:52encounter, is that they use this indicator by  itself. Let me tell you why this doesn t work.
36. 2:58The MACD indicator works extremely well if  the market is in a trend. So for example here,
37. 3:03the MACD indicator is doing a great job  indicating when the price is about to move
38. 3:08upward. Because the chart is in an upward trend. But here, the price is in a downward trend,
39. 3:13but the MACD is still signaling to buy  long even though the price is going down.
40. 3:19To fix this issue, for example if  we are trading long, we only want
41. 3:22to trade if the market is in an uptrend.  You never want to trade against the trend,
42. 3:27because the odds will always be against you. So, an easy way to figure out if the market
43. 3:31is in an uptrend. You simply just  need to add a 200 day moving average.
44. 3:36To do this Once we have the indicator added,
45. 4:06you ll just see a single line. If the price is above that line,
46. 4:09the market is in an uptrend. If the price is  below that line, the market is in a downtrend.
47. 4:15So after learning that we only want to  buy when the market is in uptrend, if
48. 4:18we re going long of course. if we put all this together,
49. 4:21we buy if the macd lines cross below the  zero line mark, and the current price
50. 4:27also above the 200 day moving average. This will guarantee that you are only
51. 4:32trading when the market is in an  uptrend, which is a very power combo.
52. 4:36If you wanted to short, you would just do  the exact opposite. Make sure the price is
53. 4:40below the 200 day average and the macd lines  are crossing downward above the zero line.
54. 4:45So as an example we would enter a long trade  right here, because the macd lines are crossing
55. 4:51upward below the zero line, and the current  price is above the 200 day moving average.
56. 4:56Now what I like to do is set a stop loss below the  200 day moving average, so the 200 day almost acts
57. 5:03as a wall that the price has to break through  to hit my stop loss. Then I like to have a 1.5
58. 5:08profit ratio for my profit target mark. So as you can see for this example,
59. 5:13the strategy worked exactly as we  wanted it to, and we made money.
60. 5:17But, we can still make this  trading strategy even better.
61. 5:21This macd strategy combined with a 200 day moving  average, works extremely well only if there is a
62. 5:27lot of price movement. Where the strategy starts  to get kind of iffy and giving false signals,
63. 5:31is when the chart starts going  sideways and losing momentum.
64. 5:35So as you can see here the chart is moving  sideways and lost almost all of its upward
65. 5:39momentum and the macd is giving lots  of false signals. If you traded here,
66. 5:44odds are you probably lost money. To fix this issue we have to combine the
67. 5:48MACD with price action. To do this, identify  a key support or resistance where price hits
68. 5:54and bounces. So as you can see the prices goes  down, hits this point, and reverses upwards.
69. 6:00The next step is to wait for the price to  hit the same key level again. Once it does,
70. 6:05we are expecting the price to bounce off this  support and go upwards just like it did before.
71. 6:10But as a clear note, just because we made  the support and it bounced off this before,
72. 6:16doesn t mean that it will always do that again.  It can easily break through the support and drop
73. 6:20lower if it has enough momentum. If we want to make sure the price
74. 6:24is about to change in momentum, that s  when we bring out the MACD indicator.
75. 6:28So what you would do, is make sure the  price above the 200 day moving average,
76. 6:32once the price hits the support made, wait for the  lines on the MACD to cross below the zero level,
77. 6:38and that s when you enter the trade. So I just revealed to you how the MACD,
78. 6:41200 day moving average, and using support  and resistances levels gives and extremely
79. 6:46high win rate with this strategy. All I ask for in return is if you
80. 6:49to take 2 seconds of your time and like  this video. If you want to stay up to
81. 6:53date with my future strategies make to  subscribe. Because in my next video,
82. 6:56I m planning to release a strategy that works  even ever better than this MACD strategy.
83. 7:01Hope you guys learned something from this  video, and I ll see you guys next time.