Most Effective MACD Strategy for Daytrading Crypto, Forex & Stocks (High Winrate Strategy)

Trading is easy, however, consistently profitable trading is where the difficulty lies. Traders since the beginning of time have tried to come up with a strategy that they could use in order to increase their win rates while minimizing their risk. In this article, we go over one of the ways in which you could do so. We discuss the different indicators, the settings used, and also go over the results. Read on to find out more. 

Indicators Explained 

There are 2 main indicators used in this trading setup, and each of these indicators has been explained below in detail. 

EMA 

The EMA is simply the exponential moving average of the stock’s closing price over a given number of trading sessions. It works in a very similar way to the SMA (Simple Moving Average), except it gives more priority to more recent data as this is considered to be more relevant than old data. The parameter that you have to enter for the EMA is the time period. Usually, traders only go long when the current price is above the EMA, and short when prices go below the EMA. 

MACD 

The Moving Average Convergence Divergence or the MACD is a momentum-based indicator that shows the relationship between two different EMAs. It is calculated by subtracting the EMA over the larger period from the EMA over the shorter period. This line can then be superimposed over another EMA line (called the signal line) in order to use as a buy or sell signal. Usually, traders go long when the MACD is above the EMA, and short when the MACD is below the EMA. 

Settings

For this particular trading setup, the default settings were used on the MACD and the EMA period was set to 100.  

A long is initiated whenever the MACD is above the EMA, and a short is initiated whenever the MACD is below the EMA. 

The risk-reward ratio was fixed at 1:2. 

Results and Adjustments 

Initial Results 

After a 15-minute scalping session over the course of 6 months worth of past ETH data, the overall results were: 

Profitability: 697.7% net profit 

Number of Trades: 124

% of trades profitable: 58.06% 

Profit factor: 1.943

Drawdown: 21%

Adjustments 

Some additional indicators and settings that could be added in order to increase the win rate and reduce the risk employed are: 

  1. Different levels of leverage could be employed to boost the profitability and/or the win-rate associated with the strategy. 
  2. The take-profit and stop-loss levels could be tweaked to further affect the percentages of trades that were profitable. 
  3. Multiple take-profits or stop-losses could be added to change the profitability or the win rate. 

Conclusion

There are several highly profitable trading strategies that you can use in order to trade the markets and profit, but there are few that are as highly effective as the one discussed above. By implementing it even in its current form, you can make significant profits. You can also tweak the settings and alter the parameters on your own, resulting in a higher win rate and/or profitability.



Resources

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