Hello Traders!
Welcome back to the channel.
In this video we will be discussing a trading strategy that can help you maximize your profits
as a Trader the macd stochastic and parabolics are trading strategy we will be exploring
the different components of this strategy including the tools and techniques used as
well as the psychology behind it we'll also discuss how this strategy can be adapted to
fit different trading Styles and markets so stay tuned to find out how you can take your
trading to the next level with this powerful strategy if you want to watch more videos
like this make sure to subscribe like the video and hit the notification Bell so you
never miss out on any future uploads macd or moving average convergence Divergence indicator
is a technical analysis tool that is used to identify new trends and measure momentum
it's composed of two exponential moving averages that measure the difference between a fast
and slow moving average macd is a trend following momentum indicator it allows you to assess
the current Trend direction that can be bullish or bearish and predict where the price is
more likely to go based on the relationship between two moving averages and it allows
measure the rate of change of prices also known as the speed of the trend or its momentum
the macd momentum readings are useful if for example if a Trader wants to assess the strength
or weakness of trend macd relies on the latter as they provide data that is more relevant
for making decisions whether it's worth buying or selling the asset the macd indicator is
made of three key components one the macd line the fastest moving average it is the
short-term exponential moving average the macd indicator formula is calculated by extracting
a long term 26-day exponential moving average from a short term 12-day exponential moving
average macd line is equal 12-day exponential moving average minus 26 day exponential moving
average 2.
the signal line the slowest moving average it is the long-term exponential moving average
this is a nine day line designed to show the turns of the price action signal line is equal
to nine-day exponential moving average of macd line three the macd histogram fluctuates
above and below a zero line which helps to identify bullish and bearish momentum readings
the histogram is the difference between the first two elements macd line minus signal
line when macd line is above the signal line the histogram is positive and when macd line
is below the signal line the histogram is negative these three components can help you
spot potential by and sell signals in the following conditions when macd is positive
that means the macd line crossed the signal to the upside and the histogram is increasing
as well this serves as a sign of increasing momentum the price tends to grow in this case
which can be interpreted as a Buy Signal when macd is negative that means the macd line
cross the signal to the downside and the histogram is decreasing as well this serves as a sign
of decreasing momentum the price tends to drop in this case which can be interpreted
as a cell signal in general the macd provides three major types of signals one signal line
crossovers two zero line Crossovers and three Divergence let's take a closer look at how
you can spot potential buy and sell macd signals one dot signal line crossover this is the
most basic signal that you can take advantage of the signal line shows the moving average
of the macd line this is why it always lags behind the obvious crossovers of these two
lines signify potentially strong movements the position of these lines shows whether
a crossover is bullish or bearish bullish crossover happens when the short-term exponential
moving average crosses above the long-term exponential moving average Barry's crossover
happens when the short-term exponential moving average crosses below the long-term exponential
moving average two zero line crossover to strengthen the signal further look out for
the general trend if it corresponds with the crossover the reliability of this signal will
be higher this signal is similar to the previous one the difference is that the macd line crosses
the zero level instead of the signal line when it turns positive it signifies a bullish
trend and vice versa when crossing the zero line in the downwards Direction and becoming
negative macd points to a bearish trend three macd Divergence the macd indicator can also
be used to identify divergences a Divergence occurs when the macd line is indicating one
Trend while the assets price is indicating another when a bullish Divergence occurs it
is often a sign of an impending uptrend conversely when a bearish Divergence occurs it is often
a sign of an impending downtrend macd indicator is a useful tool for Traders of all levels
from beginners to Advanced but as with any technical analysis tool it should be used
in conjunction with other indicators to confirm entry and exit points as well as to identify
potential support and resistance levels the parabolics are can help you filter false signals
the parabolics are is a trend following indicator meaning it will follow the current trend of
the chart it is displayed as a series of dots and is placed on the chart in relation to
the price of the asset the indicator is also referred to as a stop and reverse system which
is abbreviated as SAR the indicator is used to identify potential reversals in the price
of an asset it can also be used to provide entry and exit points the parabolics are mainly
Works in trending markets Wilder recommends Traders should first establish the direction
of the trend using the parabolic SAR and then use alternative indicators to measure the
strength of the trend how parabolics are works the parabolics are is usually represented
in the chart of an asset as a set of dots that are placed near the price bars generally
when these dots are located above the price it signals a downward Trend and it is deemed
to be a cell signal when the dots move below the price it shows that the trend of the asset
is upward and signals are by the change in the direction of the dots produces trade signals
which can produce a profit when the price makes big swings however the indicator is
not as reliable in a flat or ranging Market it can also be used to identify potential
support and resistance levels if the price bounces off the parabolics are it can indicate
that there is strong support or resistance in that area it may produce false signals
when the price moves sideways and the trader should expect small losses or small profits
that's why the stochastic indicator will help you filter these false signals the stochastic
indicators are technical analysis tools that utilize a momentum oscillator to measure the
velocity and magnitude of price movements they are used to identify possible overbought
and oversold conditions in the market and provide signals for potential reversals or
continuation of a trend stochastic indicators measure the relationship between the closing
price of a security and its price range over a given period of time the oscillator is calculated
by subtracting the low of the period from the closing price and dividing that by the
high of the period minus the low of the period the result is then multiplied by 100 to create
the stochastic oscillator the indicator is composed of two lines the percent K line and
the percent D line the percent K line is a fast moving line that is more sensitive to
price movements the percent D line is a slower moving line that is derived from the percent
K line and is seen as a smoother version of percent k we use the crossover of the two
lines to generate signals when the percent K line crosses above the percent D line it
is seen as a Buy Signal conversely when the percent K line crosses below the percent D
line it is seen as a cell signal stochastic indicators are useful for Traders as they
can provide an indication of a potential reversal or continuation of a trend they can also be
used to identify overbought and oversold conditions in the market an overbought level is indicated
when the stochastic reading is above 80.
readings below 20 indicate oversold conditions in the market a sell signal is generated when
the oscillator reading goes above the 80 level and then returns to readings below 80.
conversely a Buy Signal is indicated when the oscillator moves below 20 and then back
above 20.
overbought and oversold levels mean that the Securities price is near the top or bottom
respectively of its trading range for the specified time period let's now jump to our
trading strategy trading strategy for this trading strategy we are going to use the three
indicators we talked previously macd stochastic oscillator and parabolic SAR all of them with
the default settings by rules for long entry follow these steps 1.
the macd lines crosses over the signal line to the upside and the histogram is increasing
as well this serves as a sign of increasing price momentum two the parabolics are has
to be below price for long entries three the stochastic oscillator must be above the 50
level or close to this level four by after the close of this strong bullish candle place
your stop loss a few Pips below the entry candle or in the previous swing low use one
to two or above risk reward ratio for your profit or use the previous swing high as your
profit Target let's see how the market will move [Music]
[Music] cell rules for short entry follow these steps one the macd lines crosses over
the signal line to the downside and the histogram is decreasing as well this serves as a sign
of decreasing price momentum two the parabolics are has to be above price for short entries
3.
the stochastic oscillator must be below the 50 level or close to this level 4.
sell after the close of this strong bearish candle place your stop loss a few Pips above
the entry candle or in the previous swing High use one to two or above risk reward ratio
for your profit or use the previous swing low as your profit Target let's see how the
market will behave [Music]
we hope you enjoyed this video and found it useful make sure to practice and understand
the strategy before applying it in real Trading and most importantly since trading involves
risk and can lead to losses always follow strict risk management rules by doing this
you will increase your chances of becoming a successful Trader thanks for watching and
good luck