MACD Day Trading Forex Strategy

The MACD Day Trading forex strategy is a smart day trading technique that comes with precision and can be deployed on a wide spectrum of trading instruments.

To achieve this precision, the MACD indicator together with two other technical indicators play a vital role in early detection of trend, spotting divergences and measuring trend patterns respectively.

Chart Setup

MetaTrader4 Indicators: ExponentialMovingAveragesSignals.ex4 (Inputs Variable Modified; FasterEMA=15, SlowerEMA=18), MACD (Default Setting), WoodiesCCI.ex4 (Inputs Variable Modified; A_period=56, B_period=18)

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

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

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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 green upward pointing arrow of the ExponentialMovingAveragesSignals.ex4custom indicator gets aligned below price bars as shown on Fig. 1.0, price is said to be driven to the upside i.e. a trigger to go long on the designated forex pair.
  2. If the green histograms of the MACD indicator break above the 0.00 level as seen on Fig. 1.0, it is a trigger to go long on the designated fx pair.
  3. If the deep sky blue line and dim gray histograms of the WoodiesCCI.ex4MT4 indicator break above the 0.00 level (see Fig. 1.0), price is said to be driven higher i.e. a trigger to go long on the selected currency pair.

Stop Loss for Buy Entry: Place stop loss 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 ExponentialMovingAveragesSignals.ex4custom indicator forms a red downward pointing arrow, it is a trigger to exit or take profit at once.
  2. If the green histograms of the MACD indicator realigns to form below the 0.00 level during a buy signal, price is said to be making a U-turn, hence an exit or take profit will suffice.
  3. If the deep sky blue line of the WoodiesCCI.ex4MT4 indicator break below the 0.00 level, an exit or take is recommended.

Sell Entry Rules

Enter a sell order if the following holds sway:

  1. If the red downward pointing arrow of the ExponentialMovingAveragesSignals.ex4custom indicator gets aligned above the candlesticks as illustrated on Fig. 1.1, price is said to be driven to the downside i.e. a trigger to go short on the selected currency pair.
  2. If the green histograms of the MACD indicator break below the 0.00 level as shown on Fig. 1.1, it is a trigger to go short on the fx pair of focus.
  3. If the deep sky blue line and dim gray histograms of the WoodiesCCI.ex4MT4 indicator break below the 0.00 level (refer to Fig. 1.1), price is said to be driven lower i.e. a trigger to go short on the currency pair of focus.

Stop Loss for Sell Entry: Place stop loss 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 ExponentialMovingAveragesSignals.ex4custom indicator forms a green upward pointing arrow below price bars while a sell signal is ongoing, it is a trigger to exit or take profit immediately.
  2. If the green histograms of the MACD indicator readjust to form above the 0.00 level during a sell alert, price is said to be making a U-turn, hence an exit or take profit will do.
  3. If the deep sky blue line of the WoodiesCCI.ex4MT4 indicator surge above the 0.00 level, an exit or take is advised.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The ExponentialMovingAveragesSignals.ex4 is a custom indicator that applies the faster EMA (5) and the slower EMA (6) crossover in defining market trend.

The WoodiesCCI.ex4 is a momentum indicator that is based on a number of patterns made by the Commodity Channel Index (CCI) indicator.

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