I have been going thru the MACD and I found a unique way of using it to predict trend reversals and continuations. I also noticed no such trading system that makes use of this particular style. Most MACD trading styles differ much from this. This is unlike other traditional MACD analysis. Am still researching with other indicators to get the best combination out of this MACD but it could be traded solely. I called this the MAXIS MACD bcos its great at spotting reversal points.
This is not a holy grail but its a great start.
Timeframe used: 4hr
I believe it will work for any timeframe above 4hr.
I also would prefer if someone coded it to arrows. thanks in advance
If Signal line 'n' Histogram > 0
If Previous Histogram > Previous Signal line
Current Signal line > Current Histogram
If Signal Line 'n' Histogram < 0
If Previous Signal line > Previous Histogram
Current Histogram > Current Signal line
I haven't been able to write the pseudocodes for buy and sell continuation. The signals will be indicated with Arrows for clearer views and less eye strains. An alert can also be added so there will be no need to always be on seat.
BUY SIGNAL -- DARKBLUE ARROW
BUY CONTINUATION -- BLUE ARROW
SELL SIGNAL --MAROON
SELL CONTINUATION -- RED
I also attached a screeshot to illustrate better.
I currently tested this with 200 Bollinger Band, Deviation 2.0 apply to close...
Buy signal ---- when prices break upper band and the macd signal for buy is met.
Sell signal ---- when prices break lower band and the macd signal for sell is met.
It gives fairly accurate signals.
RSI could also be added to make the signals a bit more precise ... the default RSI (14) ... enter a buy when prices had previously gone below 30 and enter a sell when prices had previously gone above 70.
FINALLY; On some pairs I notice more false signals than others, am also working on a good filter indicator to reduce these false signals.
Actually, the pourpose of the red moving average in MACD histogram is to provide an early signal for buy or sell.
MACD work better in large trending pairs in higer TF. You will find that in pairs that trend less, you have to aply MACD in little TF, working well that way too.
MACD is a good indicator. Some traders say that is lagging, but usually a good filter for false entries, too. You can change the settings, but standard settings work well in most pairs depending the TF you use for each pair.
I think that is a thread (s) to discuss MACD in this forum, dont remember.
MACD thread is here: https://www.mql5.com/en/forum/178018
However, if osaze wants to write about on a separate thread and develop or explain something (if if it's old and wide and generally traders available information) he's free to do it.
As a swinger, the MAXIS MACD has lesser lag
The MAXIS MACD gives a rather perfect timing for these particular trades and with the help of RSI and Bollinger Band we see points of extreme in the market.
From the screenshots you see we have entries at better prices and better timing. We all know that in Swing Trading, Market Price and Time is everything.
If prices that signals occured don't appear favourable you simply place a limit order to get a better price. This prevents huge losses and overtrading. Remember to place a favourable expiry date.
For these particular scenerios we are working with both the Bollinger Bands, RSI and of course the MACD. Our signals have been explained on my first post. These are indicators found on virtually everyones platform, and the trading style is simple.
Interesting approach, but keep in mind that it will not perform at all times. You need to be able to spot when markets change direction. The MACD is a nice tool for ranging markets, but when things change, well, this indicator becomes invalid.
But thanks for sharing and happy trading !
Too much lag.
it seems your strategy is trying to pick top and bottom. when in strong trending market, i.e up trend, you'll get so many false sell signal and much less buy signal. but in ranging market, it works very good...
Look at it carefully, RSI macd at H4 is good combi