Can You Make Money with MACD? I Risked MACD Trading Strategy 100 TIMES
HTML-код
- Опубликовано: 29 окт 2020
- MACD crossover strategy is one of the best strategies which you can use while trading stocks, forex, and cryptocurrencies. It is a great strategy both for day trading and swing trading. In this video, I tested the MACD Strategy 100 times.
Binance referral with %10 discount: www.binance.com/en/register?r...
Click to buy the best cryptocurrency wallet ever: shop.ledger.com/?r=060174241c06
The easiest way to buy cryptocurrencies with your credit card: cex.io/r/0/up110275514/0/
If you have any questions please leave a comment.
Also, please leave a comment about any video you want me to make.
THIS IS NOT INVESTMENT ADVICE. I am not a financial advisor, videos in this channel are just for educational purposes.
MAC-D is one of the most popular indicators out there. It is used by lots of traders from beginners to pros. But a question comes to mind when you think about MAC-D: “Can you really make money with only one indicator that is so easy to use?” In this video I will backtest the MAC-D trading strategy 100 times. So that you will not have to lose money on a strategy which does not work.
Welcome to the Trading Journal channel, and please don’t forget to subscribe and like for more trading and investing videos.
The strategy I will test, is called the MAC-D crossover strategy. We will use just the MAC-D indicator and the 200-period exponential moving average. Many traders criticize MAC-D is because it is so basic and it can give many false signals. But at the end of the video, you will see the winning rate of the MACD indicator, and you can decide for yourself, if you want to use it or not. If I lose money at the end of the 100 trades, we can say that MACD crossover strategy is not profitable at all.
The strategy we will use is a trend trading strategy. We will use the 200-period exponential moving average to identify the trend, and we will trade in the same direction of the trend. If the price is above the moving average, we can confirm that there is a positive trend. And there is a downward trend if the price is below the moving average.
In our strategy I will open only look to buy if the price is above the 200-period moving average and I will only look to sell if the price is below the average. So if the price is higher than the 200 EMA we will go long when MACD gives us the buy signal, and we will go short, when the MAC-D gives us the sell signal below the EMA.
Don’t worry I will show you what is a buy signal, and what is a sell one. You know that MAC-D has two lines, the blue line, and the red one. It is a buy signal when a MAC-D crossover happens below the baseline. So we will go long if the blue line goes above the red one, below zero point.
Here, let me show you an example. You can see that, the price is higher than the moving average. So, there is an upward trend. And, there is a MAC-D crossover here. The blue line crosses above the red one below the zero point. It is a buy signal so we will go long here. It was a nice trade and it was a winner, we made a 2% profit on this one.
Before starting to test, I want to show you a short signal too. MAC-D gives a sell signal when the blue line crosses down the red one above the zero point. In this example, price is below the moving average, that confirms the downward trend. And blue line crosses down the red one above the baseline. We will open a short position here. We lost this trade, since it hit our stop-loss. But don’t worry, it was a right trade to open. We will have winner and loser trades, don’t let them bother you, since we only care about the long term winning ratio.
I will risk the strategy 100 times on the stock market. But you can use the same strategy on any kind of market including forex, and cryptocurrency markets. I will test 2 stocks, 50 times each. For the test, I picked the Microsoft and the Walmart stocks. I will use the 1 hour time frame and I will open both long and short trades.
In the test, I am using 2 to 1 Risk-reward ratio. I mean that I will risk only 1 percent of my capital to make 2. So at the end of the test, we can still have a profit, even if we lose more than half of our trades. You should always use a risk-reward ratio higher than 1.5. In the backtest, I will only open trades that I risk only 1 percent of my capital. So, loser trades will cost me 1 percent while winner trades earn me 2 percent.
And I will assume that, you will trade with the same size on each trade. Let’s say that our position size is 1000 Dollars. We will make 20 dollars, if the trade we took is a winner. And we will lose 10 dollars each time we have a loser trade. At the end of the 100 trades, we will see how much we can make with 1000 dollars. Or maybe, we will lose money at the end. Therefore, you should always backtest your strategies to know your winning ratio. If you know your win ratio, you will be much more comfortable with the strategy you use.
Thanks a million for your invaluable content... it's just wonderful
I back tested this strategy my self using different time frames. I went back to Jan 1 2020 to get enough trades. 5 min, 30 min and 4 hr. on the eur/usd and the emini. Finished testing on 01/16/2021.
This strategy has a great win rate 62% as advertised on trading journal and trading rush. Thank you and great stuff.
Glad to hear that! Which time frame was the best one?
@@TradingJournal1 The best was the 30, the 4 hr. is very accurate but can't get enough trades in a year to make 100 trades. I think the 30 min and 1 hr. is about right. Although like u say it will work on any time frame.
I have started using this method in my trading and it's improved dramatically. Thanks again
nope, you guys trade the chart that already happen. Try to trade using tradingview but using replay button. You guys will see some false crossover macd very often, and bad winning rate.
Hey there I was wondering how you placed the stop loss would appreciate an answer thanks
😃👍Danke für das Video. Sehr hilfreich.
Bitte!
Awesome video thanks for this!
I hope you enjoyed it!
Great video. I subscribed and liked it. Please make more strategy videos...especially winning ones that you know of to help struggling new traders like myself and others. Thank you.
Thanks for the sub! More to come!
Please continue i like your 100* strategy videos
Will do my friend, thanks for the motivation!
Thanks for making the video. One issue I have when trading this is that on lower time frames, the movements are small and are eaten by the spread. On higher time frames, I can't find enough entries.
Yes, you are right. You should scan more markets to find more entries!
Its best on 15min or 30min
trade 3 or 4 pairs at one and lower your risk , i also dont recommend using higher time frame (1h and above ) and lower ones ( 5 or below) your best bet is the 30min chart
How to determine the stop loss in this strategy?
Thank you for the video I really liked it because I like trading rush too but I also noticed that everything Pertaining to the MACD strategy is usually talking about forex and I have been interested to know how This works with different types of stocks. As always the trend is your friend until the end of the trend. The only thing I have a problem with is I really don't understand why people do the ratio I understand the risk part of it and totally agree with that but I do not agree with the reward portion of it maybe my method is a little bit different or something. I use a 9 day exponential moving average to tell me when to get out of the trade . So in a sense that is my reward portion of it. I lean more towards letting your winners run I just can't wrap my head around the idea of having such a rigid strategy that you can only give yourself 2% when if it is possible to get more to allow it to happen. Great video thank you for sharing liked and subbed.
Yes, MACD also works with the stock market. We use the ratio for risk management, to get out of losing trades as quick as possible. However you are right, it hurts to get out of a winning trade too soon. You can trade to move your TP and SL target if the price moves in your favor. I usually do it while trading but it would take an extreme amount of time to test it. I will create a video about how you can move your take-profit targets it in the future. Thanks for commenting the issue.
Hi Buck. Can you explain more on the 9 EMA moving average exit strategy? Thanks man.
@@thineshmoghanan8150 Hi Thinesh first let me say that I use heikin ashi candles but above that when price of the candle moves above the 9-day exponential moving average and all other criteria for the macd have been met then that is my entry and basically the opposite is my exit . I don't see myself as a long-term trader so take that with a grain of salt but also at the same time if I see the price action of the candle moving below the 9-day ema and sometimes more than half of the candle then that will be my exit. I don't worry about commissions in my trading because I don't have any commissions to worry about paying so that should also be taken into consideration. I have been in trades for days or for minutes so it just really depends on the situation but it helps to keep me safe and yes of course I never risk more than 2% on any trade. I have a quick calculator that I use for trading that will tell me very quickly what 2% would be that I use on my phone to calculate the -2% then I know that if I'm at that point in the beginning of the trade it's time to get out irregardless of anything else. Also just for clarification I only trade bullish or long if the price is above the 200 EMA and bearish or short if the price is below the 200 EMA and the opposite is true for the 9 EMA if I'm going short from what I said above about using 9 EMA. hope this helps
@@rbuck145 Hey bro. Thanks a lot for the explanation. I will try to test it on my end as I trade ES mini..
@@TradingJournal1 isn’t the process as simple as increasing the ratio, 3:1, 5:1…?
Thanks
Hello, thank you for your video. How do you chose your EMA ? Should i still use the EMA 200 on a 1m or 5m time frame ?
200 EMA shows the long-term trend. Please watch my video about the moving averages
Good video,
What risk:reward would you use on a 4hr timeframe?
Perhaps you could back test which ever ratio you think is appropriate on 100 trades?
I usually trade on a 4hr chart and I never trade with a risk/reward ratio lower than 2.
@@TradingJournal1
Ok thanks for getting back,
Is your success rate ( win to loss ratio) on the 4hr higher than the 1hr or comparatively the same.
And can this be applied to forex too in your opinion?
Yes, that's why I usually trade on 4hr timeframe. And yes, you can apply it to forex markets.
@@TradingJournal1
Many thanks
Perhaps you could explain your stop loss placement? I'm a little confused after slowing the video down...
@@vinaynayyar4919 In this video, I did not use any stop-loss strategy, it was just for the example. I just put stop-losses 1% below our entry but I do not do that while trading. I use ATR or strong resistance points for deciding the stop-loss. I will make a video about that too.
dear sir have you tested any such tradagdy have win ratio above 70 if yes can you give link of that video
Can you please make a video that suggests good combination of indicators for 1 minute timeframe?
Will do soon!
When backtesting, how do you account for the fact the last 100 trades are typically in a certain 'market environment' and thus the strategy might not actually be profitable when the environment changes? Do you only find out through your bank balance?! ;)
We use the 200 E.M.A. for telling us the market environment actually. But you are right, 100 trades are not enough to tell if the strategy works %100. Over time, it is easier to decide which strategies work and which don't :)
What risk to reward ratio did you use in the video? Also did you count the fees involved?
Like I told in the video the ratio was 2:1
No, unfortunately I did not count the fees
I think sometimes you entered non-confirmed macd crossovers, so your backtest is wrong
Can u please explane, where can i put stop lose in this test.. Amazing performance... Thank u ..
In this backtest, I used fixed stop-losses but it is not always so smart to do so
thanks
Welcome
Nice one bro. I was searching for a video that shows the risk reward of 2:1. Thanks a lot. You saved me atleast 1 day of time. Because this is the exact strategy I wanted to backtest with a risk reward ratio of 2:1.
No problem 👍 Glad it helped!
do you only sell if you make 2% gain or do you sell beforehand even if you don't lose 1%?
I created this video as an example and I sell if I lose %1 or make %2. Whichever happens first.
@@TradingJournal1 that makes sense
Can this be used with 5 minutes timeframes for day trading?
Of course!
these results are reasonable and within results obtained by others who tested the strategy 100 times , of course you still can optimize it but this is impressive and one can make money from it , thank you
Thank you too!
does this works in crypto market?
Yes, it does!
No objective rules to place your stop loss, it makes the backtest invalid
Thanks for the criticism, but it is just for an example backtest.
it is loosing strategy, other youtuber already tested it over 1000 times. The content is worthless. Especially when you say it works on any market - that shows you have no idea what you are doing as trader