MACD Divergence Strategy | Trading Strategies
MACD Divergence strategy- is a very reliable system and is based on the standard MACD indicator. Currently, the divergence between the MACD divergence startegy line and the rate of the currency pair is the basic sign of this strategy. This system is quite dense points of entry and exit but it is easy to notice the signal and operations can be very beneficial because it helps capture the pull-backs and reversals of trend.
Characteristics of this trading strategy:
- Easy to notice the signs.
- Only one standard indicator is used.
- Good profit in the standings.
- The levels of take-profit and stop-loss are inaccurate.
- rare occurrence in graphics long term.
- All currency pairs and timeframe should work. But short periods are recommended because they yield more opportunities.
- Add the MACD (Moving Average Convergence Divergence) to the graph, set the period of rapid MME (Fast EMA) to 12, the MME perído slow (Slow EMA) to 26 and MACD MMS to 9; apply to Close (Close).
# Enter Long position when the price shows a bearish trend and MACD indicator shows the uptrend.
# Enter Short position when the price shows a bullish trend and MACD indicator shows the downtrend.
Set stop-loss to the next level of support when operating length, or the next level of resistance when operating shortly. Place the take-profit to the next level of resistance when operating length, or the next support level for short positions. If the system generates reversal signal – close the previous position first.
The graphic example is a currency pair EUR / USD in the period M15. As you can see in the chart, the price line was declining in the downward trend, while the MACD indicator was rising in the downward trend during the extended period. The entry point is marked at the level where it was made clear that the downtrend is over on the chart currency pair. The stop-loss was placed at the level of support formed by the pattern of double bottom chart, while the take-profit level was put to the resistance level formed by the pull-backs bearish short-lived trend. The ratio PT / SL is quite good here – about 1.5.