MACD Crossover Forex Swing Trading Strategy

October 12, 2016

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MACD Crossover Forex Swing Trading Strategy

MACD Crossover strategy is one of the most famous strategies in the trading world. This indicator helps a trader identify a trend.

MACD consists of 2 lines. These are the fast moving line and the slow moving line. When the faster moving MACD line crosses the slower moving to the upside, that means the market is in an uptrend so you look to buy. If it crosses to the downside, it means the market is in a downtrend, so you look to sell.

Trading Rules:

The MACD must cross.
Place a buy stop or sell stop order depending on the trend.
Place stop loss significantly away from your trade entry point to avoid getting prematurely stopped out.
To exit the trade, wait for the opposite trade signal before you exit. For example, if you were in a buy trade, then wait for a sell signal and when that happens, you exit your buy trade and enter a sell trade.

DISADVANTAGES:

MACD is a lagging forex indicator, signals can be late, it means the market has already made a big move and you may get stopped out.
False signals will appear during sideways or range market.

ADVANTAGES:

Great for a trending market. It means you can get large profit.

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