Most Effective MACD Strategy for Daytrading Crypto, Forex & Stocks (High Winrate Strategy)

in this video i'm revealing the best strategy that you can use with the macd indicator so without further ado let's get on with the video the moving average convergence divergence or also known as the macd is one of the most simplest and popular indicator used by traders essentially it is a trend following indicator that shows the relationship between two moving averages so first let's apply it onto our chart so you want to go to the indicator section type in macd and click the one on top now before we start we first need to know how does the macd work so we can see here there are four components to the macd first we have these two lines the macd line and the signal line notice the difference between the two the macd line moves faster and is more sensitive to price changes which will be the main focus of the macd indicator compare that to the signal line which reacts slower to price changes therefore giving it a more smoother appearance next we have the histogram which represents the difference between the macd line and the signal line for example if the line crosses above the signal line the histogram will turn green and if it crosses below the histogram will turn red the gap between the macd line and the signal line also affects the size of the histogram as you can see if the two lines are further apart the histogram gets bigger and if the two lines get closer the histogram becomes smaller and finally we have the zero line which simply represents the center of the macd indicator now the way traders utilize this indicator to identify momentum is by looking at the crossover between the macd line and the signal line let me show you an example if the macd line crosses above the signal line it indicates that the market is on an upwards momentum and if it crosses below it indicates that the market is only downwards momentum traders can also utilize the size of the histogram to determine the strength of the momentum itself if the macd crosses above the signal line while the histogram is getting larger it shows us that the upwards momentum is getting stronger similarly if the histogram is getting smaller in size it indicates that the upwards momentum is getting weaker now we've already established that the macd is based on moving averages and so the question is why should you use the macd and not the moving average well let me give you a quick comparison so here we have the macd that is set to default settings 12 and 26 and over here we also have two exponential moving averages which are set to the same values as the macd which are 12 and 26. notice the correlation between the two indicators every time we have a crossover on the moving averages we also have a crossover on the macd but it's between the macd line and the zero line but remember what we look for in the macd is not the zero line but rather the crossover between the macd line and the signal line and so as you can see the crossover on the macd gave a much earlier entry signal compared to the crossover on the moving average that's why i prefer it as my momentum indicator now let's talk about the different strategies that you can use with the macd indicator so first a common mistake that traders make is that they're using the indicator by itself let me show you why it's a bad idea to use the macd alone so here we can see that the overall market is only downtrend however the macd is crossing over upwards so notice how the signals are contradicting the macd is indicating a bullish momentum but the market is only downtrend this is exactly why you shouldn't use the macd by itself because what the macd is showing us is only the short term momentum and as traders we also need to take the long term trend into consideration because we never want to trade against a trend and so a simple but high win rate strategy that i recommend for beginners is by combining the macd with a long term trend indicator like the 100 ema this way we can safely trade the macd while making sure that we're staying within the same direction of the long-term trend so this is how you trade the strategy the first step is you want to identify the long-term trend by looking at the 100 ema if the price is above the 100 ema it indicates that the long term trend is up and if the price is below the 100 ema it indicates that the long term trend is down so once you've identified the trend the next step is we want to look for crossovers on the macd that shows the same signal as the long term trend so in this particular example we can see that the long term trend is up meaning we only take signals when the macd crosses over upwards and so here's where you want to take a long position now for your exit strategy you can place your stop loss at the nearest swing low and set your profit target at 1.5 times your stop loss and as you can see this trade ended up being profitable so let's look at another example in this chart we can see that the price is below the 100 ema indicating that the long term trend is down next we have a cross down on the macd and so this will be our entry signal to go short now for your stop loss place it above the nearest swing high and set your profit target at 1.5 times your stop loss and as you can see the price hits our profit target and so this counts as a successful trade so that was a simple macd strategy for beginners that you can use now for advanced traders if you want to get more profits using the macd you cannot simply rely on beginner crossover techniques because remember crossovers tend to work only on trending markets if the market is on a range like this the indicator will give you many false signals so that is why if you want to increase the win rate i recommend using a more advanced version of the strategy which is by combining the macd with price action so here's how the strategy works the first step is we need to choose a time frame in this case i'm using the four hour time frame now the next thing you need to do is identify a key level within this time frame so as you can see the price went up hit and reverses downwards and so we can draw a resistance line up here the next step is you want to wait for the price to approach the same key level once again now once this happens we are expecting the price to reverse downwards however just because the price touches a key level doesn't guarantee that a reversal will happen because key levels aren't magic prices can always break right through and that is why we need to use extra confirmation to make sure that there is actual downwards momentum as price touches this area which is where the mac the indicator comes into play now what most traders will do is that they'll actually wait for the macd to cross over downwards before taking a short position however by doing this notice that the downwards movement has already been made and you would have entered in late and so a secret trick that i used to get an earlier entry signal is by zooming in two time frames below so i'm currently in the four hour chart so let's zoom in into the two hour chart so here's the two hour chart and all we need to do is wait for the macd to cross over downwards in this new smaller time frame and so this is where you want to take a short position so now let's go back to the 4 hour chart and compare the two entry signals so now we're back at the 4 hour time frame and notice if you would have used the crossover from the two hour time frame you would have entered in the trade here but if you would have used the crossover from the four hour time frame you would have entered in here and even though both trades ended up being profitable the smaller time frame crossover still gave us an earlier entry signal so let's look at the strategy one more time so here's the poundian on the two hour time frame and over to the left we can see that prices went down hit and reverses upwards making this a key support level now as prices went back to this level again we want to confirm that there's actual upwards momentum as price touches this area so again you want to zoom in two time frames below and apply the macd indicator so now all we need to do is use the macd to confirm the bullish momentum by waiting for it to cross over upwards once this happens you take a long position now let's go back to the two hour time frame and apply our exit strategy so for our stop loss you can place it at the key level and set your profit target at 1.5 times your stop loss and as you can see this trade ended up being profitable so i just revealed to you high win rate macd strategies that you can immediately use right now and all i ask for in return is for you to invest two seconds of your time into liking the video and subscribe to the channel it literally takes only two clicks but it means so much to me and you can also check out my other videos as well so thank you guys for watching and i'll see you in the next video

Channel: Data Trader

Views: 510,366

Rating: 4.9701629 out of 5

Keywords: data trader, day trading, day trading strategies, forex trading strategy, swing trading strategy, day trading strategy, macd indicator, best macd trading strategy, best macd settings for swing trading, best macd indicator, macd strategy, macd indicator explained, macd indicator cryptocurrency, how to trade macd indicator, macd scalping strategy, best forex macd strategy, macd crypto strategy, macd swing trading strategy, macd day trading strategy, macd crossover strategy

Id: Yj0yEBxwLVw

Length: 9min 49sec (589 seconds)

Published: Sun Jul 04 2021