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\viewkind4\uc1 \pard\sa200\sl276\slmult1\f0\fs22\lang9 Does
MACD trading strategy even work? Are online trading guru's telling you fake information?
I have wasted years testing every trading strategy out there before i found the right
one that worked! I've created this channel to expose every strategy and show their real
probabilities so you don't have to waste your precious time like i did! I'm not here to
sell any kind of online course I'm just here to help you in your Stock trading and Forex
trading career. if you find this video helpful consider subscribing to support the channel!
In this video i will back-test 100 times a very famous trading strategy called MACD cross
over. Yes you heard it right. testing 100 times takes time and will most likely prove
if you should risk your hard earned money using this strategy!\par
For those who are new to trading in late 1970s Gerald Appel created an indicator called MACD!
MACD short for moving average convergence divergence is a trading indicator used in
technical analysis of stock prices and can be applied on a Stock trading or Forex trading
chart. This is what MACD indicator looks like. by default MACD indicator will come with 2
lines! a blue line called MACD and a red line called the signal line! MACD crossover strategy
is simple once the MACD line crosses above the signal line it is considered as a buy
signal. Furthermore you should only take buy signals that are way below the zero line of
the histogram.\par but there is a big problem with this trading
setup! there is no way to identify a good direction of a trend using MACD indicator
alone. To be a profitable trader as a beginner you should always trade in the same direction
as the market is trending. So to identify the trend we are going to use 200 period Exponential
Moving Average! If the market is above 200 E M A it is considered as an up trend. Remember
only buy when the MACD gives a buy signal and the market is in an up trend.\par
here's an example of a buy setup. the market is above 200 E M A so it's an up trend. the
MACD is showing a crossover below zero line of the histogram. In this buy setup entry
is at the MACD crossover and the stop loss is below the pullback of the trend. your profit
target should be more than the risk you are taking on the trade. so if you lose one and
win one you will still be in profit. there are different ways to set profit targets.
personally i will take 25 percent off the trade when the trade reaches 1 times the risk
and will move the stop loss to break even. then i will set a second profit target of
2 times the risk i originally took on the trade. so even if the trade never reaches
my second profit target i have already taken 25 percent off the trade in profit and will
not lose money.\par here are some more buy setups in the same
trend. all three were in profit. the third trade is also a winner as the market first
went up towards the profit target and then went down. but wait!!! Don't get excited by
seeing these 3 winners in a row. this doesn't mean the strategy is profitable at all. just
because i showed you a hand picked buy setup that had 3 winners doesn't prove anything.
who knows if this strategy will have 5 or 10 losers in a row next. unfortunately many
trading youtubers on YouTube will show a hand picked setup like this to earn trust of the
viewer to sell them a paid course. they won't mention what's the probability of the strategy
so you can manage money and not blow up your account. trading is a probability game. if
you are not back testing the strategy at least 100 times you will have a difficult time with
trading or maybe will never make money. that's why I'm here! reason why i created this channel
is to show you the real probability of any trading strategy out there. By knowing the
probability of a trading strategy you can predict how many losers and winners you can
have in a row and manage your risk per trade accordingly!\par
in this next few minutes i will show you how the profit graph looks like after taking 100
trades. and how much is the winning percentage of MACD crossover strategy and how many losers
you can expect in a row. i will fast forward the next clip to save your time. the following
clip can help you understand how this strategy looks in different market condition so do
watch carefully.\par For back testing i have used Euro USD chart
but i later switch to Euro JPY. This strategy works on any time frame and also works on
both forex and stock markets. Here I'm using 30 minutes time frame. I'm also taking sell
setup in this example. strategy for sell setup is very similar to buy setup. In buy setup
we buy when MACD crosses above signal line and the MACD crossover is below the zero line
and market is above 200 Moving Average. For sell setup sell when market is below the 200
moving average and MACD line crosses below the signal line and the MACD crossover is
above the zero line of the histogram. sell setup is just opposite of buy setup.\par
You can see how the win rate and profit graph changes as i take more trades. at one point
the win rate almost reached 70 percent which is wrong! the real win rate will be revealed
when we reach 100 trades or more. As i mentioned there are different ways to set profit target.
here in this example profit target was set 1.5 times the risk i was taking. you should
always take profit more than the risk you are willing the take!\par
as you can see on the left for back testing i'm using 10000 as my starting balance. Also
i'm only risking 1 percent of my account balance on a single trade. you should only risk 1
to 2 percent of your account on a single trade. otherwise it will be difficult to handle losing
trades that will come in a row. money management is the key to success in this business! in
this example. when i lose i only lose 100. but when i win i win 150. so even if i lose
one and win one i will still make money.\par you can see how market bounces back from the
200 moving average that's because 200 moving average acts as a support and resistance.
there are many other strategies around different moving averages if you like to see them tested
maybe leave a like on this video and subscribe to support the channel! some strategies work
on intra day only and some work better on daily time frame. this strategy however works
on all time frames. further more MACD is a leading indicator so it won't give you late
entry signals like most other indicators do.\par if you are paying attention you should have
noticed i added 3 zeros in the profit column instead of 150 or -100. that's because during
the back testing i found 3 trades that had confusing entry. the entry signals were not
clear. that's why i didn't take them. if the signals are confusing do not take trades.
you can always find more good trades in the future instead of losing on that one bad trade.\par
with only around 35 trades win rate is around 66 percent. but like i said this win rate
is wrong. you will see how the win rate changes as we reach 100th trade. I'm going to fast
forward this clip even more to save your time and so we can all see how much money we make
in the end.\par if you would still like to see every trade
slow down the video by changing the video speed on youtube. set it to something like
0.25\par it took me around 1 hour to back test 100
trades. and while testing some trades almost came close to hitting the stop loss before
going back and hitting profit targets. don't panic when market is very close to hitting
your stop loss. losing is part of trading. whole point of making this video was to show
you the number of losers you can have in a strategy. No strategy works 100 percent of
time. Even professional traders use strategies that only work 60 to 65 percent of time. the
key to make money is money management and trading psychology! master that and you can
become a professional.\par here are the results of the 100 trades.\par
as you can see the win rate of this strategy is approximately 62 percent. In this back
test. I had 62 winners and 38 losers. I was able to win 9 trades in a row and lost 5 trades
in a row. After 100 trades i was able to generate 50 percent profit. that is a really good profit!
if you are a intraday trader and take around 30 trade in a month it will only take you
6 months to double your profit. that's 100 percent profit gain in 6 months and in one
year you will have 200 percent profit gain. even you don't trade intraday and only take
15 trades a month you can make 100 percent profit in one year.\par
the reason i think people lose money is because they don't know the win rate of their strategy.
and when they don't know the win rate they can't predict how many losing trades in a
row you can't expect. they probably give up when they lose few in a row and blame the
strategy. that was the point of making this video and help new traders to encourage them
to back test. You can and should test this strategy on your own to have the confidence
to execute trade with real money. good luck. some say that it is easier to win while back
testing. As an experience trader who has been trading for years i see no difference. The
people who say that don't know how to back test. if you properly understand a strategy
and have seen it perform well while backtesting you should not have any problem executing
in open markets. but this strategy is not as important as money management. Focus on
that first if you are new. don't risk more than 1 percent on a single trade. Subscribe
to this channel to see more videos hit the like button if you found this helpful. and
i will see you in the next video. this is the first video on this channel subscribe
and ring the notification bell if you want to see more! good bye!\par
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