Tag: macd indicator

I took 5000 TRADES with these RIDICULOUS Trading Strategies and got this SURPRISING RESULT!!

Post author By Trading Rush
Post date June 2, 2021

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I have taken over 5000 trades in total when I took 100 trades with many different and popular trading strategies to find their win rates. Subscribers of the Trading Rush channel saw how some trading strategies gave good profitable win rates as expected, and how some less-known strategies gave unexpected win rates.

We even gave them a Trading Rush Score, or TR Score for short, to not only compare the strategies by win rates, but also by reliability, consistent profits, easy to use, and quality of trades category. If you have been watching Trading Rush videos for a while, or if you have looked at the TR Score chart on the Trading Rush Website, you might have noticed an interesting pattern in the data we collected by taking more than 5000 trades so far.

If you are a beginner trader still struggling to make money in the Forex and Stock Market, this video will most likely make you see what makes you lose money in trading.

Out of all 5 categories that make up the TR Score, let’s start with the win rate. In this category, all strategies are rated based on the win rate they got when we took 100 trades with them.

For example, the Aroon Trading Strategy got a breakeven percentage of 40 percent with a 1.5 to 1 reward risk ratio. So the Aroon strategy got 4 in the win rate category. Similarly, the worst trading strategy we have tested got a score of 3.3, and the best trading strategy we have tested on the Trading Rush channel, got a score of 7.8.

In other words, the win rate score ranges between 3.3 and 7.8.

However, if you plot all of the win rate data as a histogram, you will see that most trading strategies got a score between 4 and 4.9.

Remember, 4 is the breakeven point because we tested with a 1.5 to 1 reward risk ratio. Why 1.5 to 1, and not 2 to 1? Because when we took 300 trades to find out what reward risk ratio is the best, we found out that 1.5 to 1 is the sweet spot.

But the results get more interesting.

If we plot the same data using a pie chart, we will see that 76.5 percent of strategies made a profit, 9.8 percent got a breakeven percentage, and only 13.7 percent actually lost money. This means that 86.3 percent of trading strategies didn’t make a loss. But apparently, 90 percent of traders lose money in trading. We will get to that in a moment but watch this.

If you look at the Easy to Use category, you will realize that most trading strategies got a score between 7 and 7.9. This indicates that most strategies that actually made money in the long run, were simple strategies that even your dog can understand easily.

The Reliability category is based on the number of false signals and other reliability issues. A good score is anything above 4. And as you can see, most strategies performed well. If you have watched the Strategies Tested 100 Times series, you saw that most strategies that make money, in the long run, lowered their win rate and became very unreliable near the end of the trends. That’s why, even though most trading strategies made money and got good win rates, their reliability score was slightly lower and close to breakeven. This also means win rate is not the only thing you should be focused on, because some strategies will give more false signals in a row, and some are more reliable in the long run.

The Consistent Profits Category shows if the profits graphs of the trading strategies, or in other words, your profit graph with the strategy will look something mediocre like this or something good like this. As we can see, the consistent profits filtered the strategies even further. It shows that more trading strategies got messy profit graphs that looked like a range market or even worse. That’s another reason not to focus on the win rate alone. But as we can see, there were trading strategies that made more consistent profits, and the profit line was going more consistently in the upward direction.

The Quality of Trades Category shows how good the signals were, whether the entry signals were too early or too late, and more. As we can see, most strategies gave okay trade signals, many gave good entry signals, and some gave excellent trade signals.

But after looking at all of this data, we now know that most strategies make money in trading, and most of them have just above breakeven percentage. In other words, the trading gurus you watch, who claim to have a win rate in trading just above the breakeven percentage, are probably the good trading gurus, because trading is not much different than flipping a coin. When you flip a normal coin, there is a 50 50 chance of the coin landing on heads. But if you find a way to win just 55 percent of the time, your long-term success is guaranteed. The trading gurus you should be running away from are the ones who claim to have high win rates like 80 percent in the long run with a high reward risk ratio, because that’s highly unlikely, and who plays a game where the opponent has an 80 percent chance of winning and makes 2 times the money they invested?

80 percent with a high reward risk is possible in the short term, but the way to get a high win rate like 80 percent in the long run, is by reducing the reward risk ratio. Occasionally, you will see some ads claiming to have indicators that got 70 80 percent win rate after backtesting even with a high reward risk ratio. They usually tell the truth, but they are also misleading.

You see, anyone who claims to have gotten a very high win rate like 80 percent with a high reward risk ratio while backtesting, is probably backtesting the strategy on smaller timeframes like 5 and 15 mins, which is a really bad idea and can lead to misleading results.

You see, most of the time the price moves like this. It goes up, down, and in the sideways direction. Most of the time it moves in the sideways direction. If you test a trading strategy on this market structure, there is no problem as this is what you will see most of the time in the live markets. But if you test a strategy on timeframes like 5 mins, you are forgetting that there are a lot of timeframes above the entry timeframe, and on some of these timeframes, the price makes sudden big moves in one direction. When the price moves strongly in one direction on a higher timeframe, the 5 min entry timeframe will be in one of the best uptrends you will see. This trend will be more like a market crash. If you take trades in the direction of the market crash, you will win a lot of trades and get a crazy high win rate. But every day is not a market crash. When the price on the higher timeframe will slow down, the entry timeframe will most likely be trending, but will no longer have that high win rate. That’s one of the reasons I don’t test scalping strategies on smaller timeframes, the results will be misleading.

The best way to get a higher win rate in trading is by using the same higher timeframe thing I just said. If you have seen the live trading videos on the Trading Rush Channel, or the live trade analysis posts on Patreon, you know that I always analyze the higher timeframe first, and trade in the direction of that higher timeframe.

But wait a minute, after taking 5000 trades, we found out that most trading strategies make money in the long run, and the lowest win rate strategy didn’t even lose 50 percent of the account, how do people lose money in the Forex and Stock Market?

Well, beginner traders switch trading strategies once they lose a few trades with it. But since most strategies only have just above average win rates, they switch again, and again, and the cycle continues, when they should be focusing on money management and trading psychology. I have already made videos on money management and trading psychology, and in the next videos, we will see how to trade price action strategies like a pro. Subscribe to Trading Rush and ring that notification bell to see that. Support Trading Rush on Patreon and get to see in-depth trade analysis and trade opportunity signals.

Thanks for watching!

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I tested FASTER MACD 100 TIMES and it was… Zero Lag MACD Trading Strategy

Post author By Trading Rush
Post date January 16, 2021
1 Comment on I tested FASTER MACD 100 TIMES and it was… Zero Lag MACD Trading Strategy

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Is the Zero Lag MACD better than the regular MACD? Can it make money in the Forex and Stock Market Trading? MACD trading strategy is one of the best trading strategies we have tested on the Trading Rush Channel. Some say the Zero Lag MACD indicator is better than the regular MACD indicator, because it gives entry signals with no lags. By no lag, I mean it doesn’t give late entry signals like the MACD indicator. Since MACD strategy gave a high win rate even though it is slow compared to this, why don’t we test the Zero Lag MACD trading strategy 100 times to find it’s win rate, and to see if it is actually better than the normal MACD that most traders use. And at the end of this video, I’m going to give it a Trading Rush Score, to see how it ranks against other trading strategies.

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!

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Best Part Of The MACD Indicator Trading

Post author By Trading Rush
Post date July 29, 2020

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Why the MACD indicator is so popular? I have already made a video on the best MACD strategy, but in that video, I never talk about why MACD is one of the most useful Indicator out there. This video is not about the MACD strategy. In this video, you will learn, how MACD can improve your existing trading strategy, by giving you some really useful information.

Do you find yourself taking trades at the end of the trends? Then this video is for you.

Lets say, when you open a chart of a stock or forex pair, you see this.
Bunch of big red candles in a row. Is this a down trend? If yes, where should you enter your position? Should you enter now?
Well, if you enter now, how do you know the price is not going to reverse as soon as you enter the trade? How do you know if the strength of the trend is still strong or weak?

What If I told you, there is an easy way to identify the strength of the trend?
In the MACD video, I talk about how the crossover of the MACD lines can be used as an entry signal generator. In this video, lets talk about the histogram, and how it can be really useful to analyse the chart better.

Before, we couldn’t tell if the trend was weakening or not. But If we add MACD to this chart, we can see that the MACD is indicating a weakness in the down trend. If you had entered a short position right here, you would have lost because the price went up. Furthermore, the MACD crossover also gave a long entry signal.

But how do these histogram bars show the strength of a trend?
Well, to answer that question, we will have to understand how the MACD indicator actually works.
If you plot the MACD indicator on a chart, it will come with default input settings of 12, 26 and 9.

In simple words, what MACD really does is, compare the average of last 12 candles, with the average of last 26 candles. When it will compare these two averages, it will get a value that will indicate, whether the average of last 12 candles is weak or strong when compared to the last 26 candles.

If that sounds confusing, Lets take a look at another example. Lets say, there is a cat on a ladder. On the first day, the cat climbs 10 steps. On the second day, the cat climbs 40 more steps. On the third day, 20 more steps. On the Fourth day, 10 more. And only 5 more step on the fifth day.

Now, anyone can tell that the cat is climbing upwards. But if you look closely, you can tell that the cat is losing its strength day by day. The cat is getting tired. And finally decides to climb back down.
If you plot the strength of the cat using a histogram. You will see it looks very similar to that of a stock or a Forex pair. In our cat example, you can see how the strength of the cat is decreasing day by day.

MACD’s histogram shows a similar thing. On this chart, one would have said, that this is a strong downtrend. But if we add the MACD indicator, we can see that, although it is a down trend, the strength of the downtrend is getting weaker. If it is getting weaker, there is a chance that the trend could reverse, or give a pullback.
And as you saw earlier, the trend did reverse, and started an uptrend.

Now remember what I said earlier. This is not an entry signal strategy. You cannot trade using the MACD histogram alone. It is better to use it to analyse the strength of the trend, and you can also use it to improve your existing Trading strategy.
Let me give you an example.

Lets say, you found a support area. You are calmly waiting for the price to reach your support area. But then few big red candles show up. These red candles can indicate a possibility of a new down trend.

Instead of getting paranoid, you simply look at the histogram of the MACD indicator. When the price comes near your support area, you see that strength of the downtrend is getting weaker. This is a good sign, as it can indicate a possible buying pressure at or near your support levels.

Once you see the weakness in the downtrend, you simply wait for a proper long entry signal, Like a candlestick pattern, and enter the trade.

In my support and resistance video, I showed a trade I took that made me 1000 percent profit. That’s 10 times what I had risked.
I took that trade near a resistance area. And one of the reasons I knew that the resistance level was still working, was because, using the histogram of the MACD, I saw the trend was getting weaker near the Resistance area.

If you ever find yourself unable to identify the strength of a trend, use the MACD indicator.

Also, In my previous MACD video, I said that MACD is a leading indicator. Some people got confused. How can an indicator be leading? Well, most indicators calculate their values using past data, and show what is currently happening on the chart.

On the other hand, MACD indicator not only relies on past data to calculate its data, but it also predicts the possible change in the direction before other indicators. Because it can predict a possible change in the direction, It is also known as a leading indicator.

In fact, If you plot 26 and 12 period Exponential moving averages, and the MACD indicator on the same chart, you will see that MACD gives an entry signal crossover way before the 26 and 12 period Exponential moving averages.

Well, now you know a little bit more about the MACD indicator. Like the video if you liked it. Maybe Subscribe for more Trading Videos. Check out the Trading Rush Website for more videos, and Thanks for watching. Also thanks to the wonderful Patrons who support the channel on Patreon, You make these videos possible.