Is the Zero Lag MACD better than the regular MACD? Can it make money in the Forex and Stock Market
Trading? MACD trading strategy is one of the best trading strategies we have tested on
the Trading Rush Channel. Some say the Zero Lag MACD indicator is better than the regular MACD
indicator, because it gives entry signals with no lags. By no lag, I mean it doesn't
give late entry signals like the MACD indicator. Since MACD strategy gave a high win rate even
though it is slow compared to this, why don't we test the Zero Lag MACD trading strategy
100 times to find it's win rate, and to see if it is actually better than the normal MACD
that most traders use. And at the end of this video, I'm going to give it a Trading Rush
Score, to see how it ranks against other trading strategies. Subscribe to the Trading Rush
channel and ring the notification bell, because we have tested many strategies 100 times to
find their win rates, and you don't want to miss that.
Like the name says, MACD zero lag, tries to reduce the lag from the regular MACD indicator, by
using a zero lag Exponential Moving Average. Result of this is a faster MACD indicator,
that gives entry signals way before the normal MACD signal. This is how the Zero Lag MACD
looks like, and as you can tell, it is very similar to the MACD indicator. It will come
with the histogram, signal line, and the MACD line, just like the MACD indicator. But if
you plot Zero Lag MACD and MACD indicator side by side, you will notice that Zero Lag
MACD signals are not only early, but they are way early and sometimes very different
from the regular MACD signals. In the MACD strategy you saw on the Trading Rush Channel,
we took buy signals when the MACD crossover was below the MACD zero line, and vice versa.
But Zero Lag MACD signals are so different, that you are not only taking early MACD signals,
but are entering at a completely different signal, where MACD wouldn't have given an
entry signal. As you can see, here Zero Line MACD is giving a crossover below the zero
line, but the MACD indicator is giving it above the zero line. But this only happens
if you use the zero line MACD rule. One of the reasons the normal MACD trading strategy
got a high win rate, was because of the zero line rule. The zero line rule filters the
false signals when the market starts to go sideways.
Since MACD Zero Lag is similar to the MACD indicator, and since we want to see if it
performs better than the MACD strategy, the strategy rules will remain the same. Buy when
the MACD line crosses above the signal line, only if the crossover is below the zero line,
and the entire candle is above the 200 period moving average. We are using the 200 moving
average to find the long term trend direction, and to filter out some false signals. So similarly,
Sell when the MACD line crosses below the signal line, only if the crossover is above
the zero line, and below the 200 exponential moving average. In the long setup, stop loss is
below the pullback, and in the short setup, stop loss is above the pullback.
So after taking 100 Trades with the Zero Lag MACD trading strategy, here's what I found
out. Number 1. As you can see in the Trading Rush
App, the profit graph went up at the start. The account size went from 10000 to almost
12000 very quickly. This was because the Zero Lag MACD gave multiple trade signals in a
short period of time when there was a slow upward trend going on, and these all trades
were won, because price made a big move up. But then, when uptrend on the pair was over,
the profit graph in the Trading Rush App started a downtrend. How long did this downtrend
last? Well, you will see in a moment.
Number 2. It shouldn't be surprising at this point, that strategies that give many entry
signals in a short period of time, don't perform very well. It is true that the MACD zero lag
strategy gives faster entry signals than the MACD strategy. But because it gives faster
entry signals, and because we are using it as a trend following strategy, it fails to
show the proper end of the pullback like the regular MACD strategy does. Look at this chart.
Here, price is in an uptrend. We know that because the price is above the 200 period
moving average. Right now, price is coming down towards the moving average, or in other
words, price is giving a pullback in an uptrend. If you have been watching the Trading Rush
Channel for a while, you know that the best place to buy in an uptrend, is near the end
of the pullback. According to the normal MACD strategy, the pullback ended, and the long
entry signal was right here. But the Zero Lag MACD strategy, gave multiple long entry
signals, and as you see, they were not as accurate as the MACD signal.
The MACD zero lag trading strategy gave some good entry signals that were faster than
the MACD signals, but in the long term, it gave many false signals, especially when the
pullback was big. Because of this, once the profit graph in the Trading Rush App started its
downtrend, it never really came up.
And after taking 100 trades with the Zero Lag MACD strategy, I got a 33 percent approximate
win rate, which is the worst win rate we have gotten on the Trading Rush Channel yet. Remember,
this strategy was tested with a 1.5 to 1 reward risk ratio, just like other strategies on
this channel. But it lost 1750 after 100 trades, and had 7 winning trades in a row, and lost
9 trades in a row. So let's give the MACD Zero Lag strategy a
Trading Rush Score, and see how it ranks up against other strategies.
In the win rate category, it gets a 3.3 out of 10. Faster MACD signals didn't give a better
win rate than the regular MACD signals, but didn't even make money in the long run.
Since MACD zero lag looks very similar to MACD indicator, and has the same entry conditions,
it gets a 7 out of 10 in the easy to use category, just like the MACD regular strategy.
But in the Reliability category, it gets a 3.3 out of 10, because it gives many false
signals, and you can actually lose money with it.
In the consistent profits category, it gets a 0 out of 10. The profit graph was consistent,
in fact, it was one of the most consistent graphs we have seen on this channel, but instead
of going up, it went down. The MACD zero lag trading strategy we tested
in this video, gives entry signals in the direction of the trend, but the MACD zero
lag spams you with entry signals whenever there is a small upward and downward move
with low accuracy. Slight momentum drop doesn't mean a reversal. When the pullbacks are small
in a strong trend, you will make money, but when there are bigger pullbacks in a trend,
MACD zero lag will make you lose money. And since the trend is not strong most of the
time, you can lose money in the long run, just like we saw in the Trading Rush App.
So it gets a 3.3 out of 10 in the Quality of Trades category.
So the overall TR score is 16.9 out of 50. And if you come to the Trading Rush Website,
you will see that the MACD zero lag indicator, takes the third place from the bottom, just
below the CCI indicator, and above the RSI ADX Trading Strategy.
So that's all! Like the Video if you liked it. If you want me to test any other indicator 100
Times, subscribe to the trading rush channel and ring that notification bell. After all,
you don't want to risk your money on an indicator that doesn't work at all. Maybe support Trading
Rush on Patreon, and see in depth trade analysis. Thanks for watching.