This is Linda an absolute legend of trading. She s A professional trader who has worked
for several hedge funds and even started her OWN hedge fund in 2002.
And did I mention she made all of her millions trading using ONE specific strategy?
Well, I was interested in lil ol Linda and I wanted to find
how she became so successful with her trading. So I did what I usually do, and did some digging.
I scavenged the internet for days trying to find the exact strategy she uses to make her millions.
And lets just say, after hours of digging, I finally found it.
Linda uses the MACD as her main component for her trades.
Now, I know what you re thinking. Oh here we go again, another macd video.
But Linda uses it in a way I ve never seen it used ever before.
See, linda changed the default settings of it to some strange numbers, took out the
histogram completely, and follows a bizarre ruleset that completely
changes the way you will look at the MACD. And I m about to share it all with you right now.
Let s get straight into it. So Linda calls this strategy the anti setup.
Meaning she s trying to find the reversal point of a trend at a major pullback point and profiting
from the massive move after the pullback. Let me paint a broad picture
of what we are looing for. Linda would look for a downwards move that is
starting to correct like this. Once it starts to correct, it would do a move like this, where price
would start heading in the opposite direction. Creating a pullback. Once she found this setup,
she would follow her specific ruleset in order to find perfect entries for this specific play. Where
she would profit from this beautiful correction. And how she finds this specific move,
is purely with the MACD. So, let s add that to our chart.
To do this, go to tradingview. If you don t yet have it, ill leave a link in my description.
Go to the indicators tab and type in MACD. Click this one, right here.
It will now be added to your chart. Now, when you first add the indicator to
your chart. The settings of it, will be set to these default settings.
While doing my spying on Linda, I noticed she completely changed these numbers to
best suit her strategy. So Let s do the same.
Go to the settings of the macd. You are going to change the fast length to 3, the
slow length to 10, and the macd length to 16. Uncheck the histogram. You also want
to make sure the average type is set to simple. I m also going to change the colors of the lines
for simplicity sake. I m going to make the macd line red and the signal line yellow.
Our indicator is now setup and it s lookin good. This strategy, will work for all
markets and all timeframes. So let s pick a random stock.
Okay, AMD it is. We ll use the one hour
timeframe for this example. For these examples we will
be looking for long trades. Now like I was saying before linda
uses the macd in a way Ive never seen used before and she follows a very very specific
set of rules to find these setups. The first rule is you need the MACD
line to make a new high. So here on this chart,
the MACDS previous high was right here. So in order for us to even consider this trade,
the macd line (the red line) must go above this level right here.
Just like this. That is step one complete.
Step 2. We want the signal line (the yellow line)
to move in the direction we are looing to trade. So in this example, we are looking for a long
trade. So we want the signal line to be moving upwards. Just like it is here.
That is step two complete. Step 3.
We want the macd line to revert back to the singal and we want the both to be
moving in the opposite direction. Since we are looking for pull back
trades. This discrepancy in the lines is showing signs that the market is hesitant
or unsure on what it wants to do next. Which is exactly what we are looking for when trying
to find pull back trades like this one. So here, when the market is doing this
pullback. Both he MACD and signal line cross, and start to head in different directions.
Which gives us the signal to enter the trade. Now, while doing my research Linda didn t say
how she uses her stop loss and take profits. So I had to do a little of my own testing.
What I found is that if you place your stop loss right below low of the move
and your take profit at the previous high. It works a great percentage of the time.
And just as you see here, it worked out beautifully.
Here s another example on Microsoft. We see a big downwards move.
We then look for the MACD line to make a new high from the previous high.
We then look for the signal to slope in the upwards direction. Which it does.
Then finally we wait for the MACD line to revert back to the signal line.
We then make sure they both start to head in the opposite direction.
Once all of this happens, we set our top loss right below the recent low and set
our take profit at the recent high. And BOOM another profitable trade.
Here s a short example. We see a big upwards move.
We then look for the MACD line to make a new LOW from the previous low. Which it does.
We then look for the signal to be slowing downwards this time. Which it does.
Then finally we wait for the macd line to revert back to the signal line. Which it does.
We then make sure they both start to head in the opposite direction. Which it does.
Once all of this happens. Set your stop loss at the recent high, then set your
take profit at the recent low. Then yet again, we get another perfect trade.
While doing my testing with this strategy, I will say, it works a great percentage of the time.
But with that said, no strategy is absolutely perfect. You will have times where the
strategy signals for you to enter and the trade will hit your stop loss.