Before we go into details of the strategy, I need to mention that this is an aggressive and high-risk strategy and should be tested by experienced traders only. You should never execute a trade without a stop loss and I strongly recommend trading on a paper account.
Let’s get to it. In a nutshell, the triple MACD strategy is a strategy where we add 3 MACDs on a chart and execute a trade based on MACD and Signal line crosses. The strategy works for both scalping and swing trading and we will use it for scalping here.
I will use TradingView and use NASDAQ as a first demonstration.
Open TradingView chart, change the timeframe to 1 minute and start with adding 3 MACDs on the chart and change the settings to the following:
Once you’re done, add 4 EMAs to the chart with the following settings:
Once you’re done, your chart should look like my chart below.
Now that we have our chart ready, let’s get to the rules of the strategy.
First off, identify the environment you’re in.
If the third MACD is above zero line (like on the chart above) and we’re trading above EMA 100 and EMA 144, bulls are in charge.
If the third MACD is below zero line and we’re trading below EMA 100 and EMA 144, bears are in charge.
If you’re going against the environment, you should be more cautious and jump out of trades more quickly.
We’re getting to the most important part – how and when to execute a trade.
As you know, we have 3 MACDs. The first one acts as an indication. The indication comes when the MACD line crosses a signal line, and this is where you should get ready to take a trade.
The second MACD is confirmation. You take a trade once the second shows a cross of the MACD line and the signal line. This needs to be confirmed by a closed candle. What often happens is that both MACD lines cross, and then we see a minor retracement. I open trade on the retracement.
Great, you’re in. But what about the third MACD? The third MACD indicates how long you should stay in the trade and gives you a real opportunity.
If you see the MACD line and the signal line going for a cross, keep holding the trade and monitor it carefully. Once the lines on the third MACD cross, the market continues in the trend for a minimum of 10 minutes and offers higher profit.
What is the role of the EMAs? The EMAs are helping me to understand the environment and give me an indication of where to close to trade or in some cases not to open a trade. If I get an indication and confirmation but the price is close to touching EMA 100 or EMA 144, I rather avoid the trade. EMA 100 and EMA 144 are pretty strong zones for rejection.
Let’s have a look at a couple of examples.
Trade against the environment
The first example is a short trade against the environment. As you can see on the third MACD, bulls are in control. However, we’ve seen both the first and second MACD giving a correct signal. As we’re in a bullish environment, we need to be more cautious. And as you can see, the market respected EMA 34 and then started another bullish movement. Most of the time, I wait for the market to hit the EMA 34, but even if you’d wait for EMA 21, you’d still take some small profit. Again, the environment was strongly bullish, so the short included very high risk, and you should hold the trade for a small amount of time only.
Trade following environment
This is a perfect example of trade. We had the third MACD showing bears are in control; we had rejection above EMAs followed by a signal on the first MACD and confirmation of the second MACD. At the same time, we also had a third MACD crossing. It cannot get better than that, and this is where you want to stay in the trade and grab the big profits.
Trade close to EMAs 100 and 144
In the example below, we did have an indication and confirmation. So, according to the rules, there was an opportunity for a trade. However, we were way too close to EMA 100 and EMA 144, so strong rejection zones. Also, bears were more in control on the third MACD. So I wouldn’t take this trade.
I’ve created a demo account on FTMO with 200,000 USD, and I’ve chosen a normal risk mode. I didn’t need it at the end but wanted to be on the safe side. I’ve used the Metatrader 5 platform as FTMO doesn’t offer cTrader for demo accounts.
Results to be added.