Moving averages are the most basic technical indicators available to traders. The most basic of all the moving averages, the Simple Moving Average (SMA), is just an average of the closing price for a given period.
Surprisingly, this unassuming indicator is so useful to traders. Traders could derive so much information from moving averages, they could use it as a base for their technical analysis.
There are many ways to use moving averages. Traders could identify trend direction by identifying the location of price in relation to a moving average. Trend could also be based on the slope of a moving average. Others would use multiple moving averages and observe how they are stacked in order to identify the trend.
Traders could also identify trend reversals using moving averages. Some traders look for price crossing over a certain moving average line. Others would look for a crossover of moving averages in order to identify trend reversals.
Rads MACD Trend Forex Trading Strategy is a strategy that is based around moving averages. It trades on trend reversals coming from a crossover of moving averages indicating a trend reversal. Trades are then ridden until the end of the trend allowing traders to cash in whenever a trend reversal occurs.
Table of Contents
Rainbow MMA is a custom technical indicator based on a set of multiple moving averages.
This indicator works just like the Guppy Multiple Moving Average (GMMA) indicator. While GMMA uses a couple of fixed preset of multiple moving averages, Rainbow MMA has multiple sets of moving averages. It has eleven sets of moving averages which traders could chose from. Set 01 uses long-term moving averages, while the succeeding sets gradually become shorter-term moving averages. It is up to the trader which set of moving averages would work best for his or her strategy.
Traders could use it as they would use a standard moving average. It could be used to identify trends or as a trend reversal signal indicator.
Traders could use it as a trend reversal indicator based on the crossing over of moving averages within a set. A crossover of two different sets of Rainbow MMA could also be used to identify trend reversals.
Rads MACD is a momentum indicator designed to detect trend direction and trend reversals. This indicator is based on the classic Moving Average Convergence and Divergence (MACD).
The classic MACD displays two lines and a histogram. The MACD line is based on the difference of two moving averages. The second line, which is the Signal Line is a moving average line derived from the MACD line. The histogram bar displays the difference between the two bars. Traders would interpret crossovers between the two line as a trend reversal. In a way, the MACD works the same way as a basic moving average crossover strategy works.
The Rads MACD is displayed as an oscillator using histogram bars. Positive bars indicate a bullish trend while negative bars indicate a bearish trend. The bars also change color indicating the strengthening of a bullish or bearish trend. A strengthening bullish trend displays lime bars while a strengthening bearish trend displays red bars.
Rads MACD Trend Forex Trading Strategy trades on crossovers of a short-term moving average line over the Rainbow MMA 04 & 08 which is in confluence with the Rads MACD trend reversal signal.
We will be using the 5-period Exponential Moving Average (EMA) as our short-term moving average line. This line hugs price action closely and is very responsive to price changes.
Trades are considered whenever the 5 EMA crosses over the Rainbow MMA 04 & 08.
To confirm the trade, the crossover signal should also be in confluence with the Rads MACD. On the Rads MACD, the histogram bar should crossover zero indicating a trend reversal.
Trades are closed as soon as the 5 EMA line crosses over the Rainbow MMA 04 signaling a probable reversal of the trend.
- 5 EMA (gold)
- RainbowMMA_04 (default setting)
- RainbowMMA_08 (default setting)
Preferred Time Frames: 1-hour, 4-hour and daily charts
Currency Pairs: major and minor pairs
Trading Session: Tokyo, London and New York sessions
Buy Trade Setup
- The Rads MACD bars should cross above zero and should be printing lime bars.
- The 5 EMA line should cross above the Rainbow MMA 04 & 08 lines.
- These bullish trend reversal signals should be closely aligned.
- Enter a buy order on the confirmation of the conditions above.
- Set the stop loss on the fractal below the entry candle.
- Close the trade as soon as the 5 EMA line crosses below the Rainbow MMA 08 lines.
Sell Trade Setup
- The Rads MACD bars should cross below zero and should be printing red bars.
- The 5 EMA line should cross below the Rainbow MMA 04 & 08 lines.
- These bearish trend reversal signals should be closely aligned.
- Enter a sell order on the confirmation of the conditions above.
- Set the stop loss on the fractal above the entry candle.
- Close the trade as soon as the 5 EMA line crosses above the Rainbow MMA 08 lines.
Traditional crossover strategies work well for identifying trends and trend reversals. Traders could make profits using crossover strategies because of the huge gains they get whenever they trade on a trend reversal.
However, crossover strategies tend to produce late entry or exit signals. This would often lead to having gains on open trades wiped out.
This trading strategy mitigates that by producing exit signals that are a tad earlier than usual. This allows traders to cash in as soon as the market shows signs of reversal.
This strategy works best on a long-term trend reversal scenario and could book huge profits on minimal risk.
Forex Trading Strategies Installation Instructions
Rads MACD 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.
Rads MACD 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 Rads MACD Trend Forex Trading Strategy?
- Download Rads MACD 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 Rads MACD Trend Forex Trading Strategy
- You will see Rads MACD 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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