Is Alligator with MACD Trading Strategy even worth Trading? I took 100 trades with MACD
combined with the Alligator Indicator, the same way a lot of you have been requesting.
Use the Alligator to identify and filter the range market, and use the MACD crossover as
the entry signal. Since taking the trade at every MACD signal is not such a good idea,
we will use the Beep Boop Indicator that we created on the Trading Rush Channel, which
is based on the MACD indicator, and will filter some of the false MACD signals in the slow
markets. Since the Beep Boop and Alligator Trading Strategies gave good win rates on
their own, it will be interesting to see what will happen if we combine Beep Boop with
the Alligator indicator.
When you combine the Beep Boop Indicator with the Alligator Indicator, the strategy looks
something like this.
When the Alligator Indicator is showing an uptrend above the 200 period moving average,
buy when the Beep Boop Indicator turns green and gives a buy signal. Stoploss goes below
the pullback.
When the Alligator Indicator is showing a downtrend below the 200 period moving average,
sell when the Beep Boop Indicator turns red and gives a sell signal. Stoploss goes above
the pullback.
In the long setup, the entry candle has to be completely above all the alligator lines.
Similarly, in the short setup, the entry candle has to be below all three alligator lines.
This is to filter some of the false signals caused by noise in the slow markets.
You can learn more about the Alligator uptrend downtrend and Beep Boop Indicator in more
detail in their dedicated videos.
However, when I took 100 Trades with the Beep Boop Alligator Trading Strategy, I found out
that when the Alligator, and the 200 period moving average, are both in a good trend,
you will most likely see a good winning streak, because MACD will identify and give a good
entry signal at almost every pullback of the trend. Because of this, in the Trading Rush
App, the profit line went in an upward direction. But, Alligator is slow.
You see, the MACD, or in this case, the Beep Boop Indicator does not always give the entry
signal after the Alligator shows the same direction. For example, in this uptrend, the
Beep Boop or MACD indicator detected the end of the pullback first and gave an entry signal.
But the Alligator was slower to react and showed the same trend direction a few candles
after the MACD crossover. Since MACD didn't give a signal when Alligator was indicating
the same trend direction, these signals that could have made money were missed but could
have taken by both, the Alligator and Beep Boop Indicator when used separately.
So the signals the MACD Alligator Strategy took, were mostly in the middle of a good
trend, and near the end of the trend when the Alligator mouth was wide open. Since the
market doesn't stay in the trend forever, many of these trades were lost when the trend
started to reverse.
After making a good upward move at the start, the profit line went in the sideways direction
for the most part. Even though the Alligator combined with MACD got a 45 percent win rate
after 100 trades with a 1.5 to 1 reward risk ratio, the Alligator and Beep Boop separately
were way better. Even their and profit graphs went in the upward direction, and not sideways.
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The Alligator with MACD Trading Strategy gets a TR score of 23.5 out of 50, and ranks 26th
from the top, above the Stochastic Trading Strategy, and below the Fisher Transform Strategy.
For reference, the MACD with the zero line rule ranks first, the Alligator on its own
ranks 8th, and the Beep Boop indicator on its own ranks 12th, but the Alligator combined
with MACD ranks 26th.
So, as I said in the previous video, the best and proper way to use Alligator with MACD
is not on the same timeframe, but MACD on the entry timeframe, and alligator on the
higher timeframe.