Like the name says, MACD zero lag, tries to reduce the lag from the regular MACD indicator, by using a zero lag Exponential Moving Average. Result of this is a faster MACD indicator, that gives entry signals way before the normal MACD signal. This is how the Zero Lag MACD looks like, and as you can tell, it is very similar to the MACD indicator. It will come with the histogram, signal line, and the MACD line, just like the MACD indicator. But if you plot Zero Lag MACD and MACD indicator side by side, you will notice that Zero Lag MACD signals are not only early, but they are way early and sometimes very different from the regular MACD signals. In the MACD strategy you saw on the Trading Rush Channel, we took buy signals when the MACD crossover was below the MACD zero line, and vice versa. But Zero Lag MACD signals are so different, that you are not only taking early MACD signals, but are entering at a completely different signal, where MACD wouldn’t have given an entry signal. As you can see, here Zero Line MACD is giving a crossover below the zero line, but the MACD indicator is giving it above the zero line. But this only happens if you use the zero line MACD rule. One of the reasons the normal MACD trading strategy got a high win rate, was because of the zero line rule. The zero line rule filters the false signals when the market starts to go sideways.

 

Since MACD Zero Lag is similar to the MACD indicator, and since we want to see if it performs better than the MACD strategy, the strategy rules will remain the same. Buy when the MACD line crosses above the signal line, only if the crossover is below the zero line, and the entire candle is above the 200 period moving average. We are using the 200 moving average to find the long term trend direction, and to filter out some false signals. So similarly, Sell when the MACD line crosses below the signal line, only if the crossover is above the zero line, and below the 200 exponential moving average. In the long setup, stop loss is below the pullback, and in the short setup, stop loss is above the pullback.

 

So after taking 100 Trades with the Zero Lag MACD trading strategy, here’s what I found out. 

Number 1. As you can see in the Trading Rush App, the profit graph went up at the start. The account size went from 10000 to almost 12000 very quickly. This was because the Zero Lag MACD gave multiple trade signals in a short period of time when there was a slow upward trend going on, and these all trades were won, because price made a big move up. But then, when uptrend on the pair was over, the profit graph in the Trading Rush App started a downtrend. How long did this downtrend last? Well, you will see in a moment.

 

Number 2. It shouldn’t be surprising at this point, that strategies that give many entry signals in a short period of time, don’t perform very well. It is true that the MACD zero lag strategy gives faster entry signals than the MACD strategy. But because it gives faster entry signals, and because we are using it as a trend following strategy, it fails to show the proper end of the pullback like the regular MACD strategy does. Look at this chart. Here, price is in an uptrend. We know that because the price is above the 200 period moving average. Right now, price is coming down towards the moving average, or in other words, price is giving a pullback in an uptrend. If you have been watching the Trading Rush Channel for a while, you know that the best place to buy in an uptrend, is near the end of the pullback. According to the normal MACD strategy, the pullback ended, and the long entry signal was right here. But the Zero Lag MACD strategy, gave multiple long entry signals, and as you see, they were not as accurate as the MACD signal.

 

The MACD zero lag trading strategy gave some good entry signals that were faster than the MACD signals, but in the long term, it gave many false signals, especially when the pullback was big. Because of this, once the profit graph in the Trading Rush App started its downtrend, it never really came up.

 

And after taking 100 trades with the Zero Lag MACD strategy, I got a 33 percent approximate win rate, which is the worst win rate we have gotten on the Trading Rush Channel yet. Remember, this strategy was tested with a 1.5 to 1 reward risk ratio, just like other strategies on this channel. But it lost 1750 after 100 trades, and had 7 winning trades in a row, and lost 9 trades in a row.

So let’s give the MACD Zero Lag strategy a Trading Rush Score, and see how it ranks up against other strategies.

 

In the win rate category, it gets a 3.3 out of 10. Faster MACD signals didn’t give a better win rate than the regular MACD signals, but didn’t even make money in the long run.

Since MACD zero lag looks very similar to MACD indicator, and has the same entry conditions, it gets a 7 out of 10 in the easy to use category, just like the MACD regular strategy.

But in the Reliability category, it gets a 3.3 out of 10, because it gives many false signals, and you can actually lose money with it.

In the consistent profits category, it gets a 0 out of 10. The profit graph was consistent, in fact, it was one of the most consistent graphs we have seen on this channel, but instead of going up, it went down.

The MACD zero lag trading strategy we tested in this video, gives entry signals in the direction of the trend, but the MACD zero lag spams you with entry signals whenever there is a small upward and downward move with low accuracy. Slight momentum drop doesn’t mean a reversal. When the pullbacks are small in a strong trend, you will make money, but when there are bigger pullbacks in a trend, MACD zero lag will make you lose money. And since the trend is not strong most of the time, you can lose money in the long run, just like we saw in the Trading Rush App. So it gets a 3.3 out of 10 in the Quality of Trades category.

So the overall TR score is 16.9 out of 50. And if you come to the Trading Rush Website, you will see that the MACD zero lag indicator, takes the third place from the bottom, just below the CCI indicator, and above the RSI ADX Trading Strategy.

 

So that’s all!