My Bullish MACD Strategy


Tuesday, August 5th, 2014 by Michael Freeman

In this article I plan to explore the MACD, Moving Average Convergence Divergence indicator which goes hand in hand with my favorite binary options gold strategy. Professional Forex and Binary Options traders all agree that using a single indicator on it’s own is not a sufficient way to generate consistent winning trades. The use on an indicator, including the MACD must be combined with a strategy and ideally with fundamental analysis.

I know that many of you are not familiar with MACD and I want to break it down today and provide you an insight for how this powerful technical analysis can assist you with predicting an accelerating Bullish Trend, since MACD in definition is a ‘short-term trend following, momentum indicator! It shows us the connection between two moving averages and let me explain.

MACD has 3 components

1) MACD line = the difference between two moving averages, set by default on 12 day – 26 day EMA)
2) A signal line =  9 day EMA. Important: This is our Buy/Sell Trigger or in reference to binary options, our CALL Signal!
3) The Histograph = represents the difference between those two lines. so for example when the two lines meet the histogram is at zero.

macd-signalline

MACD Tutorial on YouTube – Recognizing a Bullish Signal on a 60 minute chart

How do we recognize a bullish signal?

1) When the MACD line crosses over the signal line, it signals us to buy (call trade). In essence, the forumula that’s behind this indicator calculates the increasing upward momentum, and it’s presented to us visually with the MACD line crossing over the signal line.. simple as that.

buysignal

2) another way to use MACD is with the centerline method where you’re basically observing the histogram and when it reaches ZERO you know that the MACD line is crossing over the Signal Line suggesting an accelerating bullish trend, signaling us of an opportunity to enter  call trade once the two lines intersect and the histogram at zero, as the MACD is about to climb above the signal line.

histogram

Watch my YouTube Video explaining how to trade using the MACD Indicator with reference to the Gold Option Strategy

The indicator is usually offered on all the free charting websites including on Investing.com  and you can set it on 5 minute candlestick charts or 1 hour, depending on your trading preferences. The MACD is an ideal indicator for short-term and works together with my favorite Gold Strategy for Binary Options which is bringing me a lot of success! If you have any questions you are welcome to email me at tradingbinaryonline@gmail.com or comment below this post.

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15 Responses to “My Bullish MACD Strategy”

  1. Tiffany Says:

    Interesting information. MACD definitely seems like useful tool and I plan to try it with your gold strategy. By the way Mike, your Fence Trading Strategy is the reason why I started watching your videos and I managed to pull a good ITM with your techniques and strategies. I can’t thank you enough Mike!

  2. Sunshine Says:

    hi …. Would this method works for :

    time frame : 10mins
    Expiry : 30 mins ???

    Please advise

  3. Michael Freeman Says:

    The MACD is ideal for short-term trades since it’s used as a bullish momentum trend indicator, so over 10 minutes the chances for a reversal are slim which can surely increase your chances to land a trade In The Money.

  4. Damian Says:

    MACD sounds like a very simple, yet very powerful tool that is easy to use and can help you earn short term money. Is it also useful for the long term? From what I can tell, this is not the case but wanted to make sure.

    After reading your post and learning about MACD I did a little research and found out that “many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting “faked out” or entering into a position too early”: do you do this as well? Do you think waiting for a confirmation is a smart thing to do or do you have to act quickly while you have the chance?

    Thank you for sharing this tool that is very helpful for beginners like me! All the best, Michael!

  5. Michael Freeman Says:

    Hi Damian, It’s a very simple indicator to understand and it’s used in combination with advanced strategies. You’ve made a good point, it’s necessary to wait for the cross over above the signal line before entering a positing, a simple touch on the signal line is not enough.. If you set the expiry for 5,10,15,30 minutes I would wait about 20 seconds after the MACD crosses over the signal line and then enter a call trade.

    Thank you for the feedback and for taking the time to read my article!

    Cheers! Mike

  6. Sheikh Says:

    MACD looks really great for short trades, I may try it out whenever I am doing trades. It seems very simple and powerful, really easy too and should help others make money in a fast time.

  7. Michiel Bosman (Netherlands) Says:

    Hello Mike, first I want to say your explanations and support are really helpful! Thanks a lot! I know you are busy, but I was wondering, is it possible to make a video to see these MACD strategies in action with real time trades and view the performance of these indicators in videos?

  8. Michael Freeman Says:

    I am actually planning to post a new live trading video tutorial with my CherryTrade account, and I will definitely go over MACD in the video. Stay Tuned!!

  9. John Says:

    Hi,

    How do you set this up in MT4 ?

    Thank 🙂

  10. Michael Freeman Says:

    In reference for your question ‘how to set up The MACD Indicator on MT4?’ please follow the steps on http://en.tradimo.com/learn/metatrader-4/set-up-macd-in-mt4/ you can download the MACD directly from this page and upload it on Meta Trader 4. Let me know if you’re still unsure how to set up the indicator on MT4. Cheers! Mike

  11. Roby Says:

    if you want to use it for an hour timeframe which should I use?

  12. Michael Freeman Says:

    Hi Roby, I am not sure if I understand your question. If you are asking “which expiry should I set if I use the MACD on an hourly chart?” I would recommend setting the expiry for 15 or 30 minutes max.. and also make sure to look at the 12 hours and 4 hours chart to verify that there’s nothing unusual going on or any major trend that is not viewable on an hourly chart. Hopefully this answers your question but if not, let me know. Cheers! Mike

  13. Anrich Says:

    If I were to used the MACD Strategy on a 1minute time frame and execute a trade on a 5min-15min will it be more accurate in winning?

  14. Tim Lanoue Says:

    Hey Anrich,

    You would have to change the settings of the MACD indicator to be honest. You should have to change the short and long time periods in order to get accustomed to the one minute time frame. There are many other fundamental technicalities that come into play here as well, what time of day you are trading, whether it is post weekend or not, around a holiday and if any potentially damaging press releases are being made about the targeted asset. When trading online with binary options as well, statistically, you have a better chance of achieving a higher in-the-money ratio with trading with longer expiry times. Hope this helps you out some!

    Tim

  15. Jeff Says:

    a powerful video. Mike i want to ask if the time frame chart is only suitable for 12hrs expiry

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