Free trading strategies which can be automated: the MACD Triple strategy. (2024)

FAQs

What is the MACD triple strategy? ›

The MACD Triple strategy bases itself on the moving average convergence divergence indicator (MACD - 12,26,9). The MACD is analyzed in three time frames: 4 hours, 1 hour and 15 minutes. Notice that the ratio of each time frame to the next is 4:1. The 1-hour and 4-hour MACDs serve as trend filters.

Some of the most commonly used technical analysis indicators include moving average (MA), relative strength index (RSI), moving average convergence divergence (MACD), stochastic oscillator, and exponential moving average (EM).

A common strategy is to buy when the MACD line crosses above the signal line as this indicates bullish momentum. Another strategy is to sell when it crosses below (which indicates bearish momentum). Traders also often look for divergences between the MACD and the price action to spot potential reversals.

For daily charts, many traders find the default MACD settings (12, 26, 9) to be very effective. This timeframe captures the broader market trends and helps filter out market noise. Combine MACD with other indicators like RSI or Bollinger Bands when analyzing a 1-day chart for a more comprehensive market view.

MACD with PRC has a 90% success rate. A stock's moving averages should at least approach one another, if not cross, before you act on that stock. MACDs rely on three exponential moving averages instead of one or two. Look for patterns where the three moving averages come together closely.

Some popular combinations are the MACD with the MFI or TRIX, but the most popular combination is MACD with Bollinger Bands. All of this is to say that the settings for the MACD are important, but there are other considerations that will be of greater help when creating a successful day trading strategy.

The Schaff Trend Cycle (STC) is a technical analysis indicator used in trading and investing to identify trends and generate trading signals. The STC indicator helps to identify trends in a smoother and more responsive manner compared to traditional MAs and even under certain parameters, the MACD.

However, it should be noted that MACD as well as RSI do not guarantee success and both have certain limitations. The MACD may generate false buy/sell signals if market conditions are extremely volatile, while the RSI during strong trends may remain in overbought or oversold territory.

Cons of using the MACD

If a trader has a longer-term outlook that this, the MACD may not be suitable. Another potential downside is that the MACD is a trend following indicator. This means that the indicator gives its signals as the trend occurs, not before it starts.

Advanced MACD generates signals whenever the signal line crosses the bars towards the top or bottom. Trader can apply Advanced MACD on all symbols with range markets especially on EURUSD and GBPUSD. A Buy order can be placed when bars and signal line are under level 0, and the signal line moves under the bars.

How to make MACD more accurate? ›

Stable markets often have less noise, so the standard or slightly slower settings can provide clear and reliable signals. For Volatile Markets: A faster MACD setting, such as 8, 17, 9, might be more effective. The shorter EMAs will respond quicker to price changes, which is vital in volatile markets.

The MACD indicator is a lagging indicator, meaning it's heavily dependent on past price action. The best way to weed out false signals is to wait for confirmation from the price action itself. For instance, if you see a bullish crossover but the price continues to decline, it might be a false signal.

A common setting is to use 50-day EMA and 100-day EMA. If the 50-EMA indicator surpasses the 100-EMA indicator, it's a buy signal. The default 12, 26, 9 settings can be used for 5-minute trading. Some traders prefer 24, 52, and 18 settings for this strategy.

What does the MACD zero line represent? The Moving Average Convergence Divergence zero line, also known as “centerline” divides the positive area of the chart from the negative. The MACD line oscillates above and below it, which is how you predict bullish and bearish momentum.

One approach gaining traction is the combination of the Moving Average Convergence Divergence (MACD) strategy with Fibonacci retracements. While MACD provides insights into momentum and trend direction, Fibonacci retracements offer key levels of support and resistance based on natural mathematical ratios.

The MACD combo strategy involves using two sets of moving averages (MA) for the setup: 50 simple moving average (SMA)—the signal line that triggers the trades. 100 SMA—gives a clear trend signal.

The “best” 3 EMA strategy depends on your trading goals and preferences. The 9, 21, and 55 EMA strategy is widely used and effective for many traders. However, there are various EMA combinations, and the best strategy is one that aligns with your trading objectives, risk tolerance, and market conditions.

The Triple Confirmation Trend Tracking strategy captures trend signals with high probability by combining signals from three major indicators — Moving Average, Heiken Ashi and Supertrend. When all three indicators give buy or sell signals simultaneously, the strategy will enter trades timely to track trends.