Since I promised to show everything with live examples and not with some hand picked setups, one of the first thing we have to do is find a trading chart that is good and where your trading strategy is giving an entry signal. I have already talked about selecting the good trading chart in the 5 step strategy video, so after following the first few steps mentioned in that video, I found two charts where a profitable strategy was giving an entry signal. In this example, I’m using the MACD Trading Strategy. MACD strategy gave one of the best win rates when we tested it 100 times on the Trading Rush channel. Obviously, the key to getting a high win rate even with a 1.5 to 1 reward risk ratio, is using a profitable trading strategy. And subscribers of the Trading Rush channel know that MACD is your best bet in this department. If you don’t know about the MACD strategy, check out the first video on this channel. 

 

On the USD JPY pair, MACD strategy is about to give a short entry signal. At first glance, you might say this entry signal is good, because price is in a downtrend, and if we look to the left, price is even at the resistance area. If we wait for the MACD entry signal and take a short trade, we can set the stop loss above the pullback of the trend, and it looks like the price has enough room to go down and has a high probability of touching the 1.5 to 1 reward risk ratio profit target. But hold that thought.

 

This is a 30 min chart, if we switch to the 4h timeframe, and zoom out a little, you will notice something. If you look to the left, price is near a strong support area. Furthermore, last time when price came near this price area, it made a big move in the upward direction. A lot of buyers were interested in this area, and right now price is near it again. Which means, that even though the entry signal on the entry time frame was looking nice and dandy, it is not. If you sell right here, it’s like entering a lion’s den, because chances of buyers eating all the sellers near the strong support are fairly good. 

 

So I found another trading opportunity, this was on USD CAD, and as you can see, on this chart, price is in an uptrend. The price action is clean enough, and MACD is about to give an entry signal. Furthermore, if we look at the higher timeframe, the next strong resistance area is far away. There is a weak resistance area, but that is far away as well. It’s not that far, but since this resistance is a weak resistance, chances of price moving in the downward direction are pretty low, but not zero, so we should try to book profit before it. If you don’t know how to draw support and resistance properly, check out the support and resistance video on the Trading Rush Channel. So if we switch back to our entry timeframe, we now know that price is in an uptrend on the higher timeframe and has a higher probability of moving up.  On this chart, price is making higher swing highs and higher swing lows, and right now, we are waiting for the price to turn around and go up. How will we know when the price is turning around to go up? Well that’s where the MACD indicator comes into play. You see, MACD indicator is a momentum indicator. It will show the strength and weakness of the trend. In this case, we are using it to find the strength and weakness of the downward momentum. I have already made a detailed video about the best part of the MACD indicator, check it out to learn more. In simple words, what we are looking for is the crossover of the MACD and signal line. When the MACD line, which in this case is blue in color, crosses above the signal line, which is orange in color, we will take a long entry signal. We will set the stoploss below the pullback of the trend.

 

Since we are using the MACD Trading Strategy, and since MACD has not given an entry signal yet, we will wait until MACD gives a long entry signal. How long do we have to wait? Well.

 

I recorded this video on the 29th of October, and never really completed it. Everything I discussed so far works on both forex and stocks, I chose forex in this example because it is open 24hrs a day, and because showing a live example is much better than showing a hand picked setup from the past. After finding this setup, I never came back to see what happened to this trade. Well because I was teaching my computer to trade on its own that time for the AI Trades video. In that video, we saw how Bill the computer actually made money on its own by taking trades with emotions and with the Beep Boop indicator. And because of that, we saw how the Beep Boop indicator was surprisingly good in some of the videos after that. So this video was forgotten. I was going to delete it, but maybe some will find this useful. And since we still haven’t looked at how the two trades performed, let’s go back to the 29th Oct to find out.

 

As you can see, on the USD JPY pair, price reacted to the strong support area we drew and made a move in the upward direction. You could have made money if you had entered at the MACD signal on the entry timeframe, but like I said before, this was not a good trading setup. Price was near a strong support area, sure this trade was a winner, but in the long term, setups like these will make you lose money. The good setup we found on the USD CAD pair, made a profit. We found a long trading opportunity where price was in an uptrend, and with a long entry at the MACD entry signal, we could have gotten a 1.5 to 1 reward risk ratio trade before the weak resistance. Depending on what exit strategy you use, you could have made more profit and could have gotten a higher reward risk ratio.

 

Strategies like the MACD, give good win rates on their own. But if you analyze the markets like we did in this video, you can significantly improve your trading strategy and get a higher win rate, especially if you are getting win rates around 50 to 55 percent.