Quote from Jahajee:
Even more interesting:
2m ES data for ESZ8 for September and October with
COMPOSITE entry logic:
buy/sell entries when MACD crosses MACF avd, above and below zero.
AND also buy if both MACD and MACD average crosses above zero;
Sell when both MACD and MACD average crosses below zero.
217 trades
$15,192 profit or 151% return
1-lot ES contract
Commission & slippage of $35 per trade - open and close trade
( $10 commission and $25 slippage)
$10000 initial capital
Stop Loss $200 to $250, Profit target - allowed to run up to $1500; with discretionary exit, profit will be higher
See attached
These systems can be traded profitably. Returns will be lower when markets return to normal, that is SPX 15 to 20 ATR rather than 40 to 60 as we experience now.
A good exit - LONG position: close when MACD crosses under MACD avg; SHORT when MACD crosses above MACD avg
Keep it simple.
I will use momentum to fine tune entry and exit but that is my preference because I have been using it for all my trading and am comfortable with it.
Another exit to consider is the 5/34 oscillator, called Awesome Chaos in Multicharts. It is basically a 5/34 MA, difference plotted as histogram. You can exit long MACD position when 5 MA crosses 34MA down, and opposite for short.
In these trades with MACD, don't dither around - take your profits and look for re-entry, if possible. Or, start with 2-lot position size, take profits on half, and set breakeven on the other half.... and you got to have a fairly wide stop - at least 4 to 5 points. This is useful when the markets pull back from dominant trend and MACD "kisses" or "back kisses" the MACD avg BUT does not cross. You don't want to be shaken out of your position in such a case.
