STOP Using The MACD! Try THIS Indicator Instead

hey Traders so here we have the macd indicator as we all know it is one of the most famous and oldest indicators ever created and is widely used among beginners however what if I told you that there's actually a newer version of this indicator that is proven to be almost three times more profitable than the older version and so without further Ado let's Dive Right In I'm going to show you what the indicator is and how it works so first I'm sure all of us are familiar with the mechanics of the classic macd it helps us identify potential Trends by displaying crossovers between two lines if the Blue Line crosses above the Orange Line it shows us that the market is potentially uptrending and that it would be a good buying opportunity and if the Blue Line crosses below the Orange Line it shows us that the market is potentially downtrending and that it would be a good selling opportunity now this may seem like a good and simple strategy however a common problem with the strategy is that it only works on trending markets and as we all know markets aren't always trending it can also move sideways or within a range like this and because of that the Mac the indicator would perform terribly during this type of market like in this example here we can see that the macd is crossing upwards which supposedly tells us that an uptrend is coming however because the market structure is moving sideways it gave us a false signal and the market did not go up as expected now over time these false signals could accumulate and slowly wipe out their profits and could even bring your account towards the negative and so what if I told you that this new version of the macd indicator could also help us identify Trends however it could also eliminate these fall signals for us when the market is ranging therefore minimizing your loss and so that indicator is called the impulse macd similar to the old macd the impulse macd is also a momentum indicator that could detect Trends however it has its own unique feature the difference is that unlike the normal macd which displays multiple false signals when the market is ranging the impulse macd filters out these false signals and goes completely flat as you can see here and so because of this unique feature you're now less likely to get trapped by these fall signals and now I'm going to show you exactly how to apply this indicator onto your chart how it works and the different strategies that you can use so the first thing you want to do is apply the indicator onto your chart now the charting platform that I'm using is called tradingview.com once you've opened it you want to go to the indicator section type in impulse macd and choose the one by a lazy bear next once you've applied the impulse macd we want to change the appearance of the indicator so that it's simpler to look at and to do that you go to settings style and follow this exact preset that I created and as you can see the impulse macd now looks much more organized now let's take a look at each part of this indicator so similar to the normal macd this indicator also has four components first we have this blue line called the impulse macd line next we have this Orange Line called the signal line furthermore we have the histogram and finally we have the middle line now how do we use this indicator so very similar to the normal macd the way we identify Trends on the market is by looking at the crossover between the impulse macd line and the signal line if the impulse Mac d-line crosses above the signal line it indicates that the momentum is going upwards and if the impulse Mac d-line crosses below the signal line it indicates that the momentum is going downwards however if the two lines go flat like this it indicates that the market is ranging or moving sideways and you should avoid taking any positions now let's move on to the different strategies that you can use with this indicator so this next strategy is a little bit more advanced but it also has a higher win rate it's called the impulse macd extension and this is how you trade it the first step is we need to manually add overbought and oversold levels on the indicator and so what you do is you drag your mouse above the middle line of the indicator and press alt h or you can just add the lines manually like this and so this will be your overbought line for your oversold line you do the exact same thing but in the opposite value so this time drag your mouse to below the middle line and again press alt h now you have your oversold line so the reason we apply these overbought and oversold levels to the indicator is because we want to make sure that we only take positions from crossovers that happen outside of these overbought or oversold levels because this means that the price is overextended and prices that are overextended will have a higher chance of making significant moves now you may be wondering how did I determine the exact placement of these lines so here's how you do it first let's start with identifying the placement of our overbought line so first you want to zoom out now immediately we can see that there are two types of crossovers that's happening first are crossovers that happen further from the middle line which are called the major crossovers next we also have the smaller crossovers that are happening closer to the middle line which are called the minor crossovers now what you want to do is separate the major crossovers from the minor ones by drawing a horizontal line and so the minor crossover should be contained below the line and the major crossover should be contained above the line again the reason for this is because we only want to take positions from these major Crossovers and ignore the minor ones and so this will be your overbought line now for your oversold line you want to place it and the opposite of your overbought line so since your overbought line is at this value I'm going to place it at the negative of that value and so this will be your overbought and oversold levels now keep in mind these values are not fixed you can always adjust these lines depending on the crossover placements and also the different market conditions so if you want to use this indicator on another pair you would need to adjust new overbought and oversold levels based on the market conditions of that pair now that your indicator is ready here's how you treat the strategy so first for your Buy Signal you want to only take positions if the impulse macd crosses over upwards but the crossover needs to happen below the oversold line similarly for your cell signal you only take positions if the impulse macd crosses over downwards but the crossover needs to happen above the overbought line remember crossovers that happen between the lines like this will be ignored this is because we want to make sure that we only take positions if the price is overextended so let's look at a couple of examples so in this setup we spotted a crossover upwards on the macd while the crossover is happening below the overbought line indicating that the price is on an upwards momentum while being oversold and so this will be a valid buy position next for your risk management you can set a stop loss below the nearest swing low and a profit Target at one and a half times your stop loss and as you can see this trade ended up being profitable let's look at another example here we spotted a crossover downwards on the impulse macd however as you can see this crossover happened inside the lines meaning this signal will be ignored because again you want to make sure that the price is overextended next we spotted another crossover downwards but this time it happened above the overbought line meaning there's a downwards momentum while the price is overbought and so this will be a valid sell signal now for your stop loss you can set it at the nearest support level and set your profit Target at one and a half times your stop loss and as you can see this trade ended up being profitable now moving on another Advanced strategy that you can utilize with the impulse macd indicator is by using it to hunt breakouts so first let's start with the definition a breakout is when price makes a sudden and significant move towards One Direction and if you could take advantage of these significant moves it could result in a massive profit with minimal risk and so a common pattern that tends to happen is that breakouts tend to form after a long period of ranging or sideways Market and by using the impulse macd's ability to identify these ranging markets we can use it to our advantage and find breakouts before they happen so here's how you trade the strategy the first step is finding a range market and we can do that by waiting for the impulse macd to go flat as shown here however you also need to take into consideration the length of the flatness remember we only want to use signals where the impulse macd goes flat for a long period of time we do this to ensure that we don't get a false signal because the longer the market stays within range the higher the chance that a breakout would happen now once you've identified the ranging Market the next step is predicting the direction of the breakout will it happen to the upside or the downside and so the way you do this is by looking for signs of rising momentum as shown by the histogram which are the bars that you can see on The Middle so let's look at an example of that here we can see that the histogram is currently flat and after that it slowly starts Rising towards the upside as reflected by the price also going upwards indicating that the overall momentum is bullish which means based on this example we can conclude that the breakout will likely happen towards the upside and so this is a good opportunity to take a buy position next you also need to make sure that your risk management is on point now because this is a breakout strategy it means that it can have a high profit potential while maintaining low risk which is why for stop loss you can set it just slightly below your entry position right here and as for a profit Target you can set it slightly higher a typical breakout strategy usually has around a three to one risk ratio and so you can set it at three times the length of your stop loss and as you can see this trade ended up being profitable and so I just revealed to you multiple impulse macd trading strategies that you can easily Implement and trade right now and all I ask for in return is for you to give two seconds of your time into liking this video And subscribe to the channel it only takes 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: 665,743

Keywords: data trader, day trading, day trading strategies, stock trading, trading, forex trading strategy, swing trading strategy, day trading strategy, impulse macd, macd trading strategy, macd indicator, how to use the macd indicator, macd indicator strategy, best macd trading strategy, best macd settings for scalping, macd for scalping, macd tutorial, macd indicator explained, best macd strategy crypto, impulse macd lazybear, macd indicator day trading, macd strategy tradingview

Id: hHlJgsgCPag

Length: 11min 21sec (681 seconds)

Published: Fri Feb 03 2023