Free trading strategies which can be automated: the MACD Triple strategy. (2024)

FAQs

What is the MACD triple strategy? ›

The MACD Triple strategy bases itself on the moving average convergence divergence indicator (MACD - 12,26,9). The MACD is analyzed in three time frames: 4 hours, 1 hour and 15 minutes. Notice that the ratio of each time frame to the next is 4:1. The 1-hour and 4-hour MACDs serve as trend filters.

A common strategy is to buy when the MACD line crosses above the signal line as this indicates bullish momentum. Another strategy is to sell when it crosses below (which indicates bearish momentum).

MACD Settings – Setting Up MACD on Your Chart

The second reveals the number for the longer (slower) EMA, while the third is the difference between both. The standard settings for the MACD are 12, 26, and 9.

Some of the most commonly used technical analysis indicators include moving average (MA), relative strength index (RSI), moving average convergence divergence (MACD), stochastic oscillator, and exponential moving average (EM).

Best MACD Settings for 1-Day Chart

For daily charts, many traders find the default MACD settings (12, 26, 9) to be very effective. This timeframe captures the broader market trends and helps filter out market noise.

Some popular combinations are the MACD with the MFI or TRIX, but the most popular combination is MACD with Bollinger Bands. All of this is to say that the settings for the MACD are important, but there are other considerations that will be of greater help when creating a successful day trading strategy.

While the MACD has many strengths and can help traders spot trend reversals, it is not infallible and struggles, particularly in sideways markets. Since the MACD is based on underlying price points, overbought and oversold signals are not as effective as a pure volume-based oscillator.

The standard MACD settings (12, 26, 9) are time-tested and widely used, offering a good balance for various market conditions. They tend to be reliable for capturing broader market trends.

The second MACD settings are 19,39,9. Each of the MACDs have a purpose; the fast MACD using the 12, 26, 9 readings are only to be used to enter the trade at the zero-line crossover. The slower MACD using the 19, 39, 9 readings are only to be used to exit the trades when the MACD line crosses the signal line.

How to avoid MACD false signals? ›

Increasing the number of periods for the signal line will reduce the number of crossover signals, helping avoid false signals. However, trade signals will occur later than they would with a shorter signal line EMA. The indicator can be applied to any timeframe, but it's preferable to choose those from H1 and bigger.

The strategy is to buy – or close a short position – when the MACD crosses above the zero line, and sell – or close a long position – when the MACD crosses below the zero line. This method should be used carefully, as the delayed nature means that fast, choppy markets would often see the signals issued too late.

The Schaff Trend Cycle (STC) is a technical analysis indicator used in trading and investing to identify trends and generate trading signals. The STC indicator helps to identify trends in a smoother and more responsive manner compared to traditional MAs and even under certain parameters, the MACD.

Cons of using the MACD

If a trader has a longer-term outlook that this, the MACD may not be suitable. Another potential downside is that the MACD is a trend following indicator. This means that the indicator gives its signals as the trend occurs, not before it starts.

One approach gaining traction is the combination of the Moving Average Convergence Divergence (MACD) strategy with Fibonacci retracements. While MACD provides insights into momentum and trend direction, Fibonacci retracements offer key levels of support and resistance based on natural mathematical ratios.

The MACD combo strategy involves using two sets of moving averages (MA) for the setup: 50 simple moving average (SMA)—the signal line that triggers the trades. 100 SMA—gives a clear trend signal.

The Triple Confirmation Trend Tracking strategy captures trend signals with high probability by combining signals from three major indicators — Moving Average, Heiken Ashi and Supertrend.

The Wheel Option Strategy, or Triple Income Strategy, is designed to maximize premium income through the use of cash secured puts, straddles and covered calls.