MaCross MACD 5M System

[franskw]

The MaCross-MACD M5 System

This system was inspired by 5m momo and Moving average crossover strategies.

Settings:

Type: Momentum-Trend-follower.

Timeframe: M5.

Indicators: Linear Weighted Moving Average (Period-200/Close), MACD (13-21-1/open) & Envelope (Ma period-1, Deviation 0.25/open).

Take Profit: Non fixed.

Stop Loss: 364 pips (initial, 5 digit broker)

Trailing Stop: Breakeven at 364 pips (5 digit broker) then trail stop on Envelope.

Momentum-Trend-follower? why? Because the Moving average give us the Trend while MACD give us the Momentum or the the right moment to start riding the trend.

Entry Condition:

Buy: Wait for the price to cross up the 200-lwma, the MACD histogram must have crossed up 0 level,

if not wait for it to cross.

Sell: Wait for the price to cross down thw 200-lwma, the MACD histogram must have crossed down 0 level,

if not wait for it to cross.

In both cases the operation should be opened in the opening of the bar/candle that adjust to previous rules;

however, if you want a confirmed entry wait for the next bar/candle (after the signal) this will reduce the

chances of getting trapped in a false MA cross or a "bounce" on the MA. It has to be taken into account that waiting for a confirmed entry sometimes requires to let go some pips.

If you want an aditional filter, set 2 MACD level lines at 0.0001 and -0.0001, wait for the price to open above/below

MACD level for confirmed entry.

Once the position has been opened, wait for the price to move 364 pips in your favor and when it does, set the

stop loss to breakeven. After that, trail the stop by the lower envelope (if Buy) or higher envelope (if sell)

Exit Condition:

Buy:

1-if there is a Sell signal the position must be closed inmediately and open a new one in the oposite direction.

2-The price hit the Take profit.

3-The price hit the stop loss.

Sell:

1-if there is a Buy signal the position must be closed inmediately and open a new one in the oposite direction.

2-The price hit the Take profit.

3-The price hit the stop loss.

A Moving average cross alone or a MACD 0-level cross alone should not be considered as an entry or exit signal.

This strategy requires lots of patience, depending on your trading schedule you may have several days without a signal.

MaCross-Macd works on a low win/loss ratio but a relatively high profit per trade average.

Lot Size will depend on your tolerance to risk and account balance of course.

I did manual backtest from Mar-2011 to Jul-2011 and it was a not bad at all

2145 pips/month (average)

Check out this to see full detail of the backtest.

backtest.xls

Examples:

Triying to envelope trailing the stops manualy is a hasle, so I'm attaching an Envelope Trailing EA so you just need to open the position and the EA will take care of the trailing stop. i didn't coded this EA I just tweaked a little bit to adjust to what I wanted.

I'll attach the template also.

This system is in test period so i haven't use it with real money yet, but I'm currently doing a live test with a demo account

[nonor73]

sl

Thanks for your system

but 364 pips seem to be wide ?

[ronald123]

nonor73:
Thanks for your system but 364 pips seem to be wide ?

I guess he means '36,4' pips (5 digit broker), but then he could have made things a little more clear by calling it 36 pips straight away... 364 pips target would indeed be overdoing it on the 5 minute charts :-)

hope this helps future visitors of this thread.

cheers