I was working in the lab late one night when my eyes beheld an eerie sight....
(Lyrics courtesy of the Monster Mash)
This started as an experiment with MACD and has actually backtested well enough to put up here so that you may want to forward test this super simple system. It may need some tweaking but here it is in a nutshell:
M5 Chart EUR/USD
MacD (coloured) 5,13,1 (no levels)
Stochastic (%K Only): 100,3,3 low/high simple levels 76.4 and 23.6
Stochastic (%K On;y): 14,3,3 low/high simple
(Stochastics in the same window)
Long Entry Validations (all validations must be true):
1. The 100,3,3 (yellow) %K line must be below 23.6%
2. The 14,3,3 (red) %K line must have crossed from below the 100,3,3 %K line prior to entry
3. The MacD bar must be moving up (changed colour) -signal bar
4. There must be at least 4 MacD bars prior to our signal bar that have moved down (opposite colour)
Short Entry Validations (all validations must be true):
1. The 100,3,3 (yellow) %K line must be above 76.4%
2. The 14,3,3 (red) %K line must have crossed from above the 100,3,3 %K line prior to entry
3. The MacD bar must be moving down (changed colour) -signal bar
4. There must be at least 4 MacD bars prior to our signal bar that have moved up (opposite colour)
Must Exit:
When we get 4 MacD bars of the opposite colour as our trade in a row (we must exit at close of the 4th bar) or we must exit on an opposite entry signal.
The Theory:
The 100,3,3 Stochastic mimics the price movement, except it is converting price to a range between 0-100%. As such price near 100% is exhausted climbing and price near 0% is exhausted falling.
The MaCD and 14,3,3 Stochastic keep us out of oversold and overbought markets.
The MACD 4 bar rule is preventing whipsaws.
Overall, thsi sytem is catching price at the end of the trend and looking for a reversal....risk is minimal since this is a hit or miss strategy played with tight stop losses. Overall pips gained from successful trades should overcome small losses from misses. Drawdowns should be minimal. Challenge is to exit to maximize PIP gains before we MUST Exit.
Aggressive Trading - use less MACD bars, ignore the cross, use crosses below 38.2 or above 61.8.
Stop Loss - Entry Candles Low/High +0-20 Pips.
The chart below is an example of a long and short trade. The green line is the entry and the red line the Must Exit. You can exit at anytime you like with positive PIPS, but you MUST exit when signaled.
I've included the Indicator and Template as well.
(Lyrics courtesy of the Monster Mash)
This started as an experiment with MACD and has actually backtested well enough to put up here so that you may want to forward test this super simple system. It may need some tweaking but here it is in a nutshell:
M5 Chart EUR/USD
MacD (coloured) 5,13,1 (no levels)
Stochastic (%K Only): 100,3,3 low/high simple levels 76.4 and 23.6
Stochastic (%K On;y): 14,3,3 low/high simple
(Stochastics in the same window)
Long Entry Validations (all validations must be true):
1. The 100,3,3 (yellow) %K line must be below 23.6%
2. The 14,3,3 (red) %K line must have crossed from below the 100,3,3 %K line prior to entry
3. The MacD bar must be moving up (changed colour) -signal bar
4. There must be at least 4 MacD bars prior to our signal bar that have moved down (opposite colour)
Short Entry Validations (all validations must be true):
1. The 100,3,3 (yellow) %K line must be above 76.4%
2. The 14,3,3 (red) %K line must have crossed from above the 100,3,3 %K line prior to entry
3. The MacD bar must be moving down (changed colour) -signal bar
4. There must be at least 4 MacD bars prior to our signal bar that have moved up (opposite colour)
Must Exit:
When we get 4 MacD bars of the opposite colour as our trade in a row (we must exit at close of the 4th bar) or we must exit on an opposite entry signal.
The Theory:
The 100,3,3 Stochastic mimics the price movement, except it is converting price to a range between 0-100%. As such price near 100% is exhausted climbing and price near 0% is exhausted falling.
The MaCD and 14,3,3 Stochastic keep us out of oversold and overbought markets.
The MACD 4 bar rule is preventing whipsaws.
Overall, thsi sytem is catching price at the end of the trend and looking for a reversal....risk is minimal since this is a hit or miss strategy played with tight stop losses. Overall pips gained from successful trades should overcome small losses from misses. Drawdowns should be minimal. Challenge is to exit to maximize PIP gains before we MUST Exit.
Aggressive Trading - use less MACD bars, ignore the cross, use crosses below 38.2 or above 61.8.
Stop Loss - Entry Candles Low/High +0-20 Pips.
The chart below is an example of a long and short trade. The green line is the entry and the red line the Must Exit. You can exit at anytime you like with positive PIPS, but you MUST exit when signaled.
I've included the Indicator and Template as well.
Attached File(s)
MACD_Colored_v102.mq4
6 KB
|
1,074 downloads
spudlab.tpl
2 KB
|
1,111 downloads