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I risked MACD Trading Strategy 100 TIMES Here鈥檚 What Happened... - Forex Day Trading - YouTube
Channel: TRADING RUSH
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{\*\generator Riched20 10.0.18362}\viewkind4\uc1
\pard\sa200\sl276\slmult1\f0\fs22\lang9 Does
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MACD trading strategy even work? Are online
trading guru's telling you fake information?
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I have wasted years testing every trading
strategy out there before i found the right
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one that worked! I've created this channel
to expose every strategy and show their real
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probabilities so you don't have to waste your
precious time like i did! I'm not here to
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sell any kind of online course I'm just here
to help you in your Stock trading and Forex
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trading career. if you find this video helpful
consider subscribing to support the channel!
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In this video i will back-test 100 times a
very famous trading strategy called MACD cross
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over. Yes you heard it right. testing 100
times takes time and will most likely prove
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if you should risk your hard earned money
using this strategy!\par
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For those who are new to trading in late 1970s
Gerald Appel created an indicator called MACD!
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MACD short for moving average convergence
divergence is a trading indicator used in
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technical analysis of stock prices and can
be applied on a Stock trading or Forex trading
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chart. This is what MACD indicator looks like.
by default MACD indicator will come with 2
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lines! a blue line called MACD and a red line
called the signal line! MACD crossover strategy
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is simple once the MACD line crosses above
the signal line it is considered as a buy
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signal. Furthermore you should only take buy
signals that are way below the zero line of
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the histogram.\par
but there is a big problem with this trading
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setup! there is no way to identify a good
direction of a trend using MACD indicator
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alone. To be a profitable trader as a beginner
you should always trade in the same direction
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as the market is trending. So to identify
the trend we are going to use 200 period Exponential
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Moving Average! If the market is above 200
E M A it is considered as an up trend. Remember
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only buy when the MACD gives a buy signal
and the market is in an up trend.\par
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here's an example of a buy setup. the market
is above 200 E M A so it's an up trend. the
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MACD is showing a crossover below zero line
of the histogram. In this buy setup entry
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is at the MACD crossover and the stop loss
is below the pullback of the trend. your profit
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target should be more than the risk you are
taking on the trade. so if you lose one and
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win one you will still be in profit. there
are different ways to set profit targets.
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personally i will take 25 percent off the
trade when the trade reaches 1 times the risk
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and will move the stop loss to break even.
then i will set a second profit target of
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2 times the risk i originally took on the
trade. so even if the trade never reaches
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my second profit target i have already taken
25 percent off the trade in profit and will
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not lose money.\par
here are some more buy setups in the same
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trend. all three were in profit. the third
trade is also a winner as the market first
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went up towards the profit target and then
went down. but wait!!! Don't get excited by
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seeing these 3 winners in a row. this doesn't
mean the strategy is profitable at all. just
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because i showed you a hand picked buy setup
that had 3 winners doesn't prove anything.
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who knows if this strategy will have 5 or
10 losers in a row next. unfortunately many
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trading youtubers on YouTube will show a hand
picked setup like this to earn trust of the
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viewer to sell them a paid course. they won't
mention what's the probability of the strategy
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so you can manage money and not blow up your
account. trading is a probability game. if
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you are not back testing the strategy at least
100 times you will have a difficult time with
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trading or maybe will never make money. that's
why I'm here! reason why i created this channel
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is to show you the real probability of any
trading strategy out there. By knowing the
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probability of a trading strategy you can
predict how many losers and winners you can
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have in a row and manage your risk per trade
accordingly!\par
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in this next few minutes i will show you how
the profit graph looks like after taking 100
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trades. and how much is the winning percentage
of MACD crossover strategy and how many losers
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you can expect in a row. i will fast forward
the next clip to save your time. the following
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clip can help you understand how this strategy
looks in different market condition so do
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watch carefully.\par
For back testing i have used Euro USD chart
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but i later switch to Euro JPY. This strategy
works on any time frame and also works on
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both forex and stock markets. Here I'm using
30 minutes time frame. I'm also taking sell
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setup in this example. strategy for sell setup
is very similar to buy setup. In buy setup
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we buy when MACD crosses above signal line
and the MACD crossover is below the zero line
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and market is above 200 Moving Average. For
sell setup sell when market is below the 200
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moving average and MACD line crosses below
the signal line and the MACD crossover is
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above the zero line of the histogram. sell
setup is just opposite of buy setup.\par
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You can see how the win rate and profit graph
changes as i take more trades. at one point
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the win rate almost reached 70 percent which
is wrong! the real win rate will be revealed
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when we reach 100 trades or more. As i mentioned
there are different ways to set profit target.
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here in this example profit target was set
1.5 times the risk i was taking. you should
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always take profit more than the risk you
are willing the take!\par
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as you can see on the left for back testing
i'm using 10000 as my starting balance. Also
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i'm only risking 1 percent of my account balance
on a single trade. you should only risk 1
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to 2 percent of your account on a single trade.
otherwise it will be difficult to handle losing
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trades that will come in a row. money management
is the key to success in this business! in
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this example. when i lose i only lose 100.
but when i win i win 150. so even if i lose
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one and win one i will still make money.\par
you can see how market bounces back from the
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200 moving average that's because 200 moving
average acts as a support and resistance.
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there are many other strategies around different
moving averages if you like to see them tested
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maybe leave a like on this video and subscribe
to support the channel! some strategies work
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on intra day only and some work better on
daily time frame. this strategy however works
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on all time frames. further more MACD is a
leading indicator so it won't give you late
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entry signals like most other indicators do.\par
if you are paying attention you should have
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noticed i added 3 zeros in the profit column
instead of 150 or -100. that's because during
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the back testing i found 3 trades that had
confusing entry. the entry signals were not
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clear. that's why i didn't take them. if the
signals are confusing do not take trades.
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you can always find more good trades in the
future instead of losing on that one bad trade.\par
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with only around 35 trades win rate is around
66 percent. but like i said this win rate
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is wrong. you will see how the win rate changes
as we reach 100th trade. I'm going to fast
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forward this clip even more to save your time
and so we can all see how much money we make
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in the end.\par
if you would still like to see every trade
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slow down the video by changing the video
speed on youtube. set it to something like
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0.25\par
it took me around 1 hour to back test 100
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trades. and while testing some trades almost
came close to hitting the stop loss before
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going back and hitting profit targets. don't
panic when market is very close to hitting
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your stop loss. losing is part of trading.
whole point of making this video was to show
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you the number of losers you can have in a
strategy. No strategy works 100 percent of
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time. Even professional traders use strategies
that only work 60 to 65 percent of time. the
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key to make money is money management and
trading psychology! master that and you can
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become a professional.\par
here are the results of the 100 trades.\par
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as you can see the win rate of this strategy
is approximately 62 percent. In this back
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test. I had 62 winners and 38 losers. I was
able to win 9 trades in a row and lost 5 trades
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in a row. After 100 trades i was able to generate
50 percent profit. that is a really good profit!
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if you are a intraday trader and take around
30 trade in a month it will only take you
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6 months to double your profit. that's 100
percent profit gain in 6 months and in one
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year you will have 200 percent profit gain.
even you don't trade intraday and only take
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15 trades a month you can make 100 percent
profit in one year.\par
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the reason i think people lose money is because
they don't know the win rate of their strategy.
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and when they don't know the win rate they
can't predict how many losing trades in a
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row you can't expect. they probably give up
when they lose few in a row and blame the
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strategy. that was the point of making this
video and help new traders to encourage them
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to back test. You can and should test this
strategy on your own to have the confidence
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to execute trade with real money. good luck.
some say that it is easier to win while back
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testing. As an experience trader who has been
trading for years i see no difference. The
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people who say that don't know how to back
test. if you properly understand a strategy
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and have seen it perform well while backtesting
you should not have any problem executing
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in open markets. but this strategy is not
as important as money management. Focus on
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that first if you are new. don't risk more
than 1 percent on a single trade. Subscribe
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to this channel to see more videos hit the
like button if you found this helpful. and
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i will see you in the next video. this is
the first video on this channel subscribe
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and ring the notification bell if you want
to see more! good bye!\par
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