MACD Mega Trend Forex Trading Strategy

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MACD Mega Trend Forex Trading Strategy 1

Two indicators are better than one, and three might be even better. Well, it does not always follow but with the right combination of indicators, using multiple indicators as confirmation could work well.

Confluence is a market condition wherein two or more factors within a technical analysis point the same trade direction or provide the same trade signal. It could be based on traditional naked chart breakouts or bounces. It could also be based on a combination of technical indicators.

Having a confluence of signals coming from different technical indicators is usually a good thing. Technical indicators provide objective trade signals which is unaffected by a trader’s assumptions. These trade signals often point the direction of a trend where price will more likely be going, as well as the entry point which is usually the point where price is reversing. Having trade setups based on trend direction and entry signals coming from multiple indicators increases the likelihood that price would be going a certain direction.

The MACD Mega Trend Forex Trading Strategy is a strategy that uses three indicators to scan the forex market for high probability trend reversal setups. Such trade setups could produce high yielding trades that could produce huge profits in one trade.

MACD Signals

MACD Signals is a momentum technical indicator which is based on the Moving Average Convergence and Divergence (MACD).

The MACD is a technical indicator which provides trend indications by finding the difference between two moving averages, which is plotted as a MACD histogram or line. It then draws a signal line which is a moving average line derived from the MACD line.

MACD Signals is an enhanced version of the MACD, which provides good visual representation and clear trend signals as an oscillating indicator. The parameters within the MACD signal could be tweaked according to the trader’s preference.

It indicates trend direction by displaying histogram bars on its own window. Positive bars indicate a bullish trend while negative bars indicate a bearish trend.

Mega Trend

The Mega Trend indicator is a custom indicator based on the Hull Moving Average (HMA).

Moving averages are usually plagued with two disadvantages.

Many moving averages tend to have a long lag between the reversal of a trend and the point in which the moving average would start to reverse. This is common for moving averages that are based on an extremely long period and moving averages that are modified to favor a smoother line.

On the other hand, other moving averages that tend to favor a more responsive moving average line tend to be very jagged. This creates a line that has less lag but provides more false signals.

The Hull Moving Average (HMA) captures a good middle ground between the two. It is a modified moving average line with a smoother response. At the same time, it also manages to lessen the lag which is common in most moving average indicators. This provides a good signal with a relatively fewer false signals while at the same time provides timely trend reversal signals.

The Mega Trend indicator has the same characteristics as the HMA line. It is a smooth, yet responsive moving average line based on a long-term trend. The line also changes color depending on its slope. A blue line indicates an upward sloping line which also indicates an uptrend. A red line indicates a downward sloping line indicative of a downtrend.

Median Indicator

The Median indicator is a momentum and volatility indicator based on a moving average line and the Average True Range (ATR).

This indicator is a channel indicator composed of four lines – two moving average lines in the middle and the outer lines or bands.

The two moving average lines are based on a short-term trend and tends to shadow price action quite closely. The two lines crossover whenever the short-term trend reverses and chops around whenever price is going sideways.

The outer bands are based on the middle moving average lines, shifted up and down by a multiple of the Average True Range (ATR).

The channel tends to widen whenever price starts to become more volatile and contracts whenever volatility fizzles out.

Price also tends to hug the outer bands during a strong trend and tends to stay in the middle during a weak trend or a ranging market.

Trading Strategy

This strategy trades on a confluence of trend reversal signals based on the three indicators.

The MACD Signals and Mega Trend indicators will serve as the main trend reversal signals.

On the MACD Signals, trend reversal entries will be based on the crossing over of the histogram bars from negative to positive or vice versa.

On the Mega Trend indicator, the trend reversal signal will be based on the changing of the color of the moving average line.

The Median indicator serves as the short-term trend signal. It would usually produce a crossover signal between the two median lines prior to the trend reversal signals from the MACD Signals and Mega Trend indicators.

The Median indicator would also serve as an exit strategy. Traders should close the trade as soon as the faster median line of the Median indicator crosses below the Mega Trend line.

Indicators:

  • MACD Signals
    • MaSlow: 36
    • MaSignal: 7
  • Median
  • Mega trend

Preferred Time Frames: 15-minute, 30-minute, 1-hour and 4-hour charts

Currency Pairs: major and minor pairs

Trading Session: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price should cross above the Mega Trend line.
  • The Mega Trend line should change to blue.
  • The MACD Signal bars should cross above zero.
  • The yellow line of the Median channel should cross above the red line.
  • These bullish trend reversal signals should be closely aligned.
  • Enter a buy order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss on the fractal below the entry candle.

Exit

  • Close the trade as soon as the yellow line of the Median channel crosses below the Mega Trend line.

MACD Mega Trend Forex Trading Strategy 1

MACD Mega Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should cross below the Mega Trend line.
  • The Mega Trend line should change to red.
  • The MACD Signal bars should cross below zero.
  • The yellow line of the Median channel should cross below the red line.
  • These bearish trend reversal signals should be closely aligned.
  • Enter a sell order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Exit

  • Close the trade as soon as the yellow line of the Median channel crosses above the Mega Trend line.

MACD Mega Trend Forex Trading Strategy 3

MACD Mega Trend Forex Trading Strategy 4

Conclusion

This trading strategy could produce high yielding trades with reward risk ratios as high as 8:1.

Although these types of returns do not happen all the time, it is these types of trades that could turn an ok account growth to a good profit trajectory.

Since trend reversal strategies are usually quite difficult to trade, it is important to master trade management when using this strategy. It could be a simple moving of the stop loss to breakeven, trailing a stop loss as profits run, or closing trades manually based on price action reversal clues.


Forex Trading Strategies Installation Instructions

MACD Mega Trend Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

MACD Mega Trend Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.

Based on this information, traders can assume further price movement and adjust this strategy accordingly.

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How to install MACD Mega Trend Forex Trading Strategy?

  • Download MACD Mega Trend Forex Trading Strategy.zip
  • *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
  • Copy tpl file (Template) to your Metatrader Directory / templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex strategy
  • Right click on your trading chart and hover on “Template”
  • Move right to select MACD Mega Trend Forex Trading Strategy
  • You will see MACD Mega Trend Forex Trading Strategy is available on your Chart

*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.

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