At the same time, the Parabolic SAR indicator should be bullish. That is the blue dots on the charts shown here should be below the price at the point of a long entry.
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If the parabolic SAR gives a contrary signal with the dots being above the price then there are no conditions for a trade to be taken according to this strategy. Always keep an eye on important support and resistance levels on higher timeframes and make sure there are no significant obstacles in the way of the trade.
For example, if you take the trade from the 4h chart, check where important support and resistance levels are on the daily, weekly and monthly timeframes. For best results, the MACD histogram should be above the zero level and the crossover of the signal line should happen at the same time as the Parabolic SAR reversal from bearish to bullish. The default stop for this strategy is placed according to the Parabolic SAR. So, as soon as the trade moves into some profit we start to trail the stop.
However, currently, there is no such default feature in the popular MetaTrader 4 platform, although it can be done by using an expert advisor. Indicator Exponential MA period 21 - painted in red;. Indicator Exponential MA period 34 - painted in orange;.
How to Use the MACD Indicator when Trading | IG EN
After setting the timeframe M1, that is, setting all the above indicators on it, we need to configure the timeframe M5, which should contain the following indicators with such parameters:. The MACD trend indicator with us needs to be set with such settings 21,34, SMA 1 - the histogram of the indicator itself, we paint it in green color.
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Stage 1. This stage starts from the receipt of the primary signal - intersection with the histogram MACD parameters 13,21 SMA 1 of the zero level on its scale.
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If the MACD histogram has broken the zero mark from the top to the bottom, we should be ready to open the Put-option deal. At the reverse crossing of the level - in the direction from below - upwards, we conclude the deal - Call-option that is, we buy. We note that this intersection is a rather unstable signal and we need to confirm it with the signals of all the indicators listed above, since the intersection itself is just a "beacon" of the fact that we need to be ready for further evaluation of all indicators.
Thus, within the framework of M1, a number of events are to be confirmed, confirmed by all listed indicators, so that they can be regarded as a clear signal for the conclusion of an order by a binary option:. The price must break through all three exponential averages.
MACD – 5 Profitable Trading Strategies
If, however, one of the above conditions is not met, we must make a "hang-over" of the trade and wait for the next signal. This is important for the discipline of trade and will protect our deposit from losses and premature false entries into the market. Step 2.
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The signal on M5. If we received a confirmed trade signal on M1, we need to consider M5 to make sure that our transaction will not conflict with the rules of the system. So - on M1 we get trading signals, and on M5 we confirm them. At the same time, M5 must meet the same requirements as for M1. That is, the MACD histogram must pass the zero level in the required direction, and the price should close behind the three control indicator removals EMA. It does not matter when the signal on the M5 was received a little earlier than on the M1. The main thing is that thanks to M5 we will see that we conclude deals in the necessary direction.
Stage 3.