Multi MACD Scalping Strategy For MT4
Table Of Contents:
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Multi MACD Scalping Strategy For MT4 sets the perfect example by which a simple indicator can work like a pro trading tools under different settings. This scalping method uses 21 MA, 34 MA, and 144 MA as the trend identifier.
For the filter, it uses three different sets of MACD that has three unique purposes. In this system, you will get two unique templates for the 1 minute and 5-minute chart. However, the functions of these templates are the same. For the new traders, this scalping method will be a challenging task to master. Most of the time, traders are used to complicated tools. But this scalping system is based on the simple moving average and a bunch of MACD.
But the traders should carefully select the market as you can take trades in the EURUSD, AUDUSD, GBPUSD, USDCAD, USDCHF, NZDUSD, and USDJPY pairs only. As the selection of the pairs plays an important role, the paper trading account should be used at the initial stage so the investors can know how the system reacts to different assets.
The reason we are choosing such a narrow range of instruments is to ensure the safety of the fund. In most cases, it becomes hard for the retail traders to deal with an asset like US30, Stocks, and other assets that have high volatility.
But if you focus on major’s pairs only, it becomes easier and you don’t have to worry about trading hours. Let’s see how we can use this scalping method to take our trades.
Long trade setup
We will learn to take the long trade with the help of the breakout trading technique. The investors become skeptical when they are given the choice to trade with the breakout. Breakout is just like a retracement trading method. The exception of breakout trading method is the market momentum.
The response of the traders needs to be fast to take advantage of the breakout. For breakout, a 1-minute chart is the desired analytical window. The price will cease its momentum and form a consolidation chain. The consolidation 144 MA and we need to have multiple tests of this 144 MA. During the testing phase, we need to see the minor break of the 144 MA. When the bulls establish their ground, 21 moving average will cross above the 43 moving average.
Now for the trade setup, we need to go back to the MACD indicator. The first and second MACD might show positive bars but we need the positive bars in the third MACD. When the third MACD starts creating a positive bar, we can open a new long trade with 12 pips SL. The take profit will be 24 pips.
The reason we are focusing on a 1:2 risk to reward ratio is to ensure the high win rate. If you trade with a 1:3 risk to reward ratio, we should choose the 5-minute template as the market momentum will be much more stable. Use this edge in the paper trading account and you will feel comfortable with the method.
Short trade setup
We will learn to short with the help of limit orders. The limit order entry process is very popular in the trading industry as it gives a more confident way to set up the trade. But for this system, our preferred time frame will be a 5-minute chart. The asset price must push above the 34 and 21 moving average.
But the reading in the third MACD must be negative. Set your pending orders at the 144 MA or the green MA. The stop loss for this method is only 8 pips and the take profit is 16 pips. The system can be very profitable unless you trade on the news. The rookies don’t have any idea about the major news and they take random trades with the hope that it will allow them to win more money.
But the news factors are the key catalyst that creates massive swings in the price. If you do the math, it won’t take much time to understand why people are losing more money by trying to trade in the news. The novice traders should trade when the market is stable and no high impact news is scheduled.
By learning to time the trade properly a trader can easily improve the efficiency of this method. Be very careful about the risk profile since the method is based on short term profit taking the opportunity. Those who are thinking to ignore the news data will be in great trouble. So far, we have stick to the simple approach of this method. Now let’s see the professional method by which we can manage our trade without risking too much.
Trade management technique
Special care should be taken when the traders depend on a scalping system. The reason to choose to scalp method is to create a quick cash generating source. But when you become aggressive with the approach, you might miss the important metrics of risk management.
For instance, you can’t take the trade against the trend with a 2% risk. If you are trying to trade with the trend, in that case, the risk factor can be as high as 2%. But be cautious about the steps you take in the market. If you ignore the core steps of the market, you will be losing most of the money.
For the betterment, a trader should test different risk tolerance levels with this method. Some rookies often win a series of trades in the paper trading account and chose to trade with 3% risk exposure. But if you risk 3% and lose 4 trades in 4 sessions, you are down by 12%. On the contrary, when you risk only 1%, you will lose just 4% of the account balance. Never create unnecessary stress in your trading as it can complicate the whole process of trading business.
To be on the safe side of trading, it is very important to follow the risk profile used by the elite traders. Unless you feel comfortable with the edge, practice in the demo account. There is no reason to rush as it can lead to mistakes caused by an aggressive attitude. Lastly, have faith in the system and embrace the losses since one good trade is enough to recover 2 losing trades.
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