MACD and Stochastic oscillator trading is a momentum strategy that works well with trends on medium and long timeframes (starting with
H1, H2, H4, H6 and daily).
Currency pairs: majors and indices.
Indicator setting:
MACD oscillator (2,26, 9);
Stochastic oscillator( 8, 3,3).
A trend is determined using Stochastic
Oscillator and MACD oscillator. The main feature of this strategy is
to find where a trend starts and ends and to perform appropriate
trades. A point where a trend starts is found using MACD oscillator
lines crossing and pointing upward/downward and %D line of Stochastic
Oscillator turning. If MACD lines and %D line of Stochastic are in
the same direction, there is a good probability of trend in course. A
point where a trend ends is where MACD oscillator lines cross.
Buy : an uptrend is determined
by a turning point of %D line of Stochastic oscillator. The %D line
througth the oversold zone and the line %D should be pointing up.
After the turning point of stochastic oscillator, the Signal line of
macd oscillator going upward. This crossing should be in a negative
zone and not more than 3 periods from the point where %D line of
Stochastic oscillator changes its direction. When the current
candle/bar is closed and all 3 lines (%D of Stochastic, MACD line and
MACD’s Signal line) are pointing up, a buy order is opened
with a stop loss (default: H1 20-30 pips), and a trailing stop
(default: H1 18 -25 pips) is set when the position is profitable. The
long entry is closed when MACD line crosses a signal line downward
in a positive zone.
Sell:
an downtrend is determined by a
turning point of %D line of Stochastic oscillator. The %D line
througth the Overbought and the line %D should be pointing down.
After check the turning point of stochastic oscillator, the Signal
line of macd oscillator going downward. This crossing should be in
a positive zone and not more than 3 periods from the point where %D
line of Stochastic oscillator changes its direction. When the current
candle/bar is closed and all 3 lines (%D of Stochastic, MACD line and
MACD’s Signal line) are pointing down, a sell order is
opened with a stop loss (default: H1 20-30 pips), and a trailing
stop (default: H1 18 -25 pips) is set when the position is
profitable. The long entry is closed when MACD line crosses a signal
line upward in a negative zone.
MACD and Stochastic oscillator
trading is profitable in range market and medium trend.
How apply this strategy? Go at daily
time frame of more currency pairs and check if there are currency in
range market, after go at H1 or H4 (reccomended ) and apply this
strategy at the currency in range.
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