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MACD

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Narayan
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69 views

MACD

Uploaded by

Narayan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Provide me strategy to trade using MACD indicator on 3 minute

timeframe?
Edit
Certainly. Here's a detailed strategy for trading using the MACD
indicator on a 3-minute timeframe. This strategy is designed for
short-term, intraday trading and should be used with caution due to
the quick nature of 3-minute charts.
Strategy Name: 3-Minute MACD Scalping Strategy
Setup:

1. Timeframe: 3-minute chart


2. MACD Settings:
 Fast EMA: 12
 Slow EMA: 26
 Signal Line: 9
3. Additional Indicators:
 20-period Exponential Moving Average (EMA)
 Volume

Entry Rules:

1. Long Entry: a) Price is above the 20 EMA b) MACD line crosses


above the Signal line c) MACD histogram turns positive (goes
above zero) d) Current candle's volume is above the 10-period
average volume
2. Short Entry: a) Price is below the 20 EMA b) MACD line crosses
below the Signal line c) MACD histogram turns negative (goes
below zero) d) Current candle's volume is above the 10-period
average volume

Exit Rules:

1. For Long Positions: a) MACD line crosses below the Signal line,
or b) Price closes below the 20 EMA, or c) After 15 minutes (5
candles) if neither a nor b occurs
2. For Short Positions: a) MACD line crosses above the Signal
line, or b) Price closes above the 20 EMA, or c) After 15
minutes (5 candles) if neither a nor b occurs

Risk Management:

1. Position Sizing: Risk no more than 0.5% of your trading capital


per trade
2. Stop Loss:
 For longs: 2 ATR (Average True Range) below entry price
 For shorts: 2 ATR above entry price
3. Take Profit: Set a target of 1.5:1 reward-to-risk ratio

Additional Rules:

1. Avoid trading during the first 15 minutes after market open


2. Do not trade if the ADX (14 period) is below 20 (indicates lack
of trend)
3. Be cautious of trading against major support/resistance levels
4. Avoid trading during major news releases

Implementation Steps:

1. Set up your chart:


 Open a 3-minute chart of your chosen asset
 Add MACD indicator with settings (12, 26, 9)
 Add 20 EMA
 Add Volume indicator
 Add ADX indicator (14 period)
2. Monitor for entry conditions:
 Watch for MACD crossovers
 Confirm price position relative to 20 EMA
 Check volume condition
 Ensure ADX is above 20
3. Execute trade:
 Enter when all conditions are met
 Immediately set stop loss and take profit levels
4. Manage the trade:
 Monitor for exit conditions
 Be prepared to exit manually if conditions are met before
automatic exit
5. Record and analyze:
 Keep a detailed trade journal
 Regularly review performance to refine the strategy

Backtesting and Optimization:

1. Use TradingView's strategy tester to backtest this strategy


2. Optimize parameters based on backtest results:
 Try different MACD settings (e.g., 10, 20, 7)
 Adjust the EMA period (e.g., 15 or 25)
 Test different stop loss and take profit levels

Important Considerations:
1. This strategy is high-frequency and can lead to overtrading.
Be disciplined in following your rules.
2. Transaction costs can significantly impact profitability on such
short timeframes. Factor these into your backtesting.
3. Emotional control is crucial. The fast pace of 3-minute charts
can lead to impulsive decisions.
4. This strategy may not be suitable for all market conditions. Be
prepared to sit out during choppy or low-volatility periods.
5. Always paper trade to practice before using real money.

Remember, trading on a 3-minute timeframe is extremely short-


term and can be quite challenging. It requires quick decision-
making, excellent discipline, and a solid understanding of the
market you're trading. Make sure you're comfortable with the pace
and have thoroughly tested the strategy before implementing it
with real capital.
Would you like me to elaborate on any specific part of this strategy
or discuss how to implement it in more detail using TradingView's
features?

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