Advanced MACD Forex Strategy

The Advanced MACD forex strategy is a rightly deployed to capture trends in their advanced stages whether it is bullish or bearish.

The indicators used in this strategy are rightly tweaked to define trends in the early stages, gauge the strength of trends and spot reversals respectively.

Chart Setup

MetaTrader4 Indicators: Var_Mov_Avg.ex4 (Inputs Variable Modified; nslow=36), octopus_2.ex4 (Default Setting), MACD (Default Setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair (majors, cross pairs, exotics)

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  1. If the blue dotted sienna line of the Var_Mov_Avg.ex4custom indicator gets placed somewhat below price bars as depicted on Fig. 1.0, price is said to be taken higher i.e. a trigger to go long on the stipulated currency pair.
  2. If the green vertical bars of the octopus_2.ex4custom indicator gets aligned within the indicator window (see Fig. 1.0), bulls are said to be having the upper hand, hence a trigger to go long on the designated forex pair.
  3. If the green histograms of the MACD custom indicator gets aligned above the 0.00 level as shown on Fig. 1.0, price is said to be driven higher i.e. a buy alert is looming.

Stop Loss for Buy Entry: Place stop loss 2-5 pips below short-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  1. If the Var_Mov_Avg.ex4custom indicator displays a magenta dot on its sienna line during a buy alert as exemplified on Fig. 1.0, it is a trigger to exit or take profit at once.
  2. If a red vertical bar of the octopus_2.ex4custom indicator gets displayed within the indicator window, it is a trigger to exit or take profit immediately.
  3. If the green histograms of the MACD MT4 indicator readjust to form below the 0.00 level while a buy signal is ongoing, an exit or take profit will suffice.

Sell Entry Rules

Enter a sell order if the following holds sway:

  1. If the magenta dotted sienna line of the Var_Mov_Avg.ex4custom indicator gets placed fairly above price bars as seen on Fig. 1.1, price is said to be driven lower i.e. a trigger to go short on the fx pair of focus.
  2. If the red vertical bars of the octopus_2.ex4custom indicator gets aligned within the indicator window (refer to Fig. 1.1), bears are said to be having the field day, hence a trigger to go short on the selected fx pair.
  3. If the green histograms of the MACD custom indicator gets aligned below the 0.00 level as illustrated on Fig. 1.1, price is said to be pushed lower i.e. a buy signal is approaching.

Stop Loss for Sell Entry: Place stop loss 2-5 pips above short-term resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes to the fore:

  1. If the Var_Mov_Avg.ex4custom indicator displays a blue dot on its sienna line while a sell signal is ongoing (see Fig. 1.1), an exit or take profit is advised.
  2. If a green vertical bar of the octopus_2.ex4custom indicator gets displayed within the indicator window during a sell signal, it is a trigger to exit or take profit at once.
  3. If the green histograms of the MACD MT4 indicator readjust to form above the 0.00 level while a sell signal is running, an exit or take profit will do.

Sell Trade Example

Fig. 1.1

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About The Trading Indicators

The Var_Mov_Avg.ex4 custom indicator is based on the moving average, but yield more accurate signals based on its advanced noise filter.

It deploys changes in the color of its dotted line to signal trend changes.

The Octopus_2.ex4 is a forex trend indicator, a modification of an earlier version (octopus_1) and forms bars or histograms within its main window.

Green bars are indicative of a buy signal, while red bars indicates a sell signal.

The Moving average convergence divergence (MACD) is a trend-following momentum indicator that reveals the connection between two moving averages of price.

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