I thought I'd share with you some interesting setups I came across on the web. And also my feelings and experience with them.
This first one, let's call it Gerald Appel, the inventor of MACD, because its a simple MACD strategie. This is simply technical analysis, you should always back your trades with some fundamentals aswell so you can improve the amount of good trades.
Also don't go and trade with any setup before backtesting it. Nothing works the same for each person and much less for each instrument. This might work good on forex and do bad in oil for instance.
*This is a very simple setup, that is only going to signal long entrys. I don't recomend using to signal short sell opportunities, because it is known to give more wrong signals that way, but hey backtest it, like I said, and do what works for you.
We only need a standard MACD for this: FAST MA PERIOD 12; SLOW MA PERIOD 26; SIGNAL PERIOD 9
The actuall strategy(finnaly you say):
1 hour chart.
Wait till the MACD (black line)is bellow 0 and crosses the slower moving average (red) up. Pretty simple right? This is our buy signal.
You don't use stop loss in this strategy, which will take alot of monitoring, the signal to close the position will be giving by a reverse signal of course.(red line over black line)*
Again you can test this in your favourite instrument to trade, and maybe add a stop loss, lets say at 40 pips if it works for you. I actually done this in some currency pairs.
To take your profits its the same, you wait till MACD is above the 0 line and crosses the red line downwards.
This is for me the biggest flaw of this setup. Those sell signals are usuall too late and you lose part of your profit, or sometimes too soon and fake signals. You can do several things to twik and optimise this setup:
-Take profits when theres a nice amplitude of MACD and slower moving average (before sell signal).
-Set an amount of pips at which you are comfortable closing your trade, I must say, not a good idea thou. "Let the winners ride" :)
- Wait for the second sell signal.
-Use the MACD histogram to close your trade on the 3rd red bar after you went long, or the 3rd descending red bar. - Combine the last two.
Pick one of this options and stick to it for consistent results.
See you on the next one.