Chart Patterns vs. Candlesticks Patterns
Every trader needs to have a trading system.
New and Simple Trend Strategy
2023-03-16 • Updated
Information is not investment advice
As we know, strong trend movements are important on the market. We present you a trending strategy that will allow you to identify the very beginning of a solid incipient trend and open a deal.
Strategy setups
Instruments: any
Indicators: MACD (12,26,9), Parabolic SAR (0.02; 0.2) and SMA (period 10) with the default settings
Timeframe: >H1
Risk management rules: Fixed trade volume with 0.1 lot.
Rules for a long entry
- Wait for the MACD line to cross the signal line upwards.
- At the same time, a Parabolic SAR point appears at the bottom of the candle.
- Confirmation is when the price chart crosses the moving average upwards.
It is recommended to use a Stop Loss at the level of the nearest local minimum before receiving the signal.
Rules for a short entry
- Wait for the MACD line to cross the signal line downwards.
- At the same time, a Parabolic SAR point appears on top of the candle.
- Confirmation is when the price chart crosses the moving average downwards.
It is recommended to use a Stop Loss at the level of the nearest local maximum before receiving the signal.
Rules for a Take Profit
- The choice of Take Profit is possible based on the ratio 3:1, i.e., for one lost profit point, a deal should bring 3 points of profit.
- A trade can be closed before Take Profit is achieved if opposite signals from the MACD indicator and/or Parabolic SAR are received.
Important remarks
When searching for signals, it is important to pay attention to how the MACD lines are crossed. The sharper the crossing (the more substantial the "angle of attack"), the greater the chance of a successful signal. Typically, the angle of attack depends on how far the MACD lines deviate from each other before they cross.
The MACD+Parabolic indicators can be combined with other types of technical analysis. For example, with chart analysis and support/resistance levels. If the buy signal appears when the price tests support levels, the probability of a successful transaction increases. The same is true for the sell signal at resistance levels.
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