PRICE ACTION MACD STRATEGY -- LEARN TO EARNREAD CAREFULLY TO LEARN AND EARN
Strategy backtested below for two years from 12/2/2014 to 12/2/2016
Rules:
Only Long tardes when 55 EMA is above 200 EMA
Only short trades when 55<200 EMA
Time Frame 1H
Long Entry Preconditions:
Price above 55 EMA
Positive Divergence seen on MACD signal line (for High probability Entries)
MACD histogram above zero line
Long Entry Trigger:
Price break above Significant peak fractal of previous downwave OR the break above prior peak fractal high.
Exit Strategy or Stop:
Type 1 Exit
Precondition: Negative Divergence seen on MACD signal line; and
Trigger: Break below a consolidation level or the prior minor swing low
Type 2 Exit
Hourly close below 55 EMA
Exit type I or type II whichever comes earlier
# If trade exited but price shoots back piercing out of 55 EMA or is already above 55 EMA, a break of previous peak fractal with MACD histogram above zero line triggers entry again.
# Exit Strategy discussed above works well in long trades but chops in short trades. Tweaking a little by taking 1:1 or smaller targets instead of the Exit strategy may help in this issue.
Back Testing
12/2/2014 to 12/2/2016
1) E=6283 Ex=6487 +204
2) E=6575 Ex=6723 +148
3) E=6725 S=6743 +18
4) E=6749 Ex=6808 +59
5) E=6741 Ex=7269 +528
6) E=7345 Ex=7589 +244
7) E=7572 S=7530 -42
8) E=7548 Ex=7740 +192
9) E=7734 Ex=7770 +36
10) E=7709 Ex=8056 +347
11) E=8051 Ex=8064 +13
12) E=7815 Ex=7759* +56
13) E=7928 Ex= 8364 +436
14) E=8455 Ex=8521 +66
15) E=8152 Ex=7995* +157
16) E=8206 S=8270* -64
17) E=8148 S=8281* -133
18) E=8531 Ex=8861 +330
19) E=8681 Ex=8791 +110
20) E=8840 Ex=8862 +22
21) E=9612 Ex=8413* +1199
22) E=8808 S=8732 -76
23) E=8284 S=8311* -27
24) E=8270 Ex=8066* +204
25) E=8421 S=8390 -31
26) E=8428 Ex=8557 +129
27) E=8461 Ex=8549 +88
28) E=8322 Ex=7559* +763
29) E=8180 Ex=8210 +30
30) E=7988 Ex=7784* +204
31) E=7812 Ex=7682* +130
32) E=7945 S=7905 -40
33) E=7556 Ex=7403* +153
34) E=7402 S=7463* -61
35) E=7255 Ex=6884 +371
#Trades with asterisk mark (*) at the end are short trades.
Winning Trades= 27
Profit= 6237 points
Losing Trades= 8
Loss=474 points
Net points= 5763
Profit with one lot= Rs4,32,225
I have also tested this strategy for current year but I ll update the results later as its very time consuming.
It has been observed that the strategy keeps us in a trade as long as trend is strong. The losses made in the strategy are quite manageable due to price action and divergence combination.
Maximum loss made in a trade was 133 points and maximum profit was 1199 points.
I ll further test this strategy; and the comments of fellow traders can surely help in fine tuning.
I have noticed some fellows make carbon copies of already published ideas :) Its a highly undesirable practice and should be avoided by all means. B'coz readers can differentiate between the original idea and the copied one. Hope I made my point.
Trade safe and stay healthy.
Do hit like and comment.
Best Regards
Bravetotrade
