The BEST “MACD, Stochastic Oscillator, and RSI” trading strategy For Beginners That No-one Ever Told You. This tutorial provides a clear, winning, step-by-step guide to, “How to successfully trade in the Forex and stocks, or any financial markets and generate consistent profits”.
So, by the time you finish this tutorial, you’ll know exactly when to enter high probability trade using the “RSI, MACD, and STOCHASTIC Indicators.
There are two lines you should be aware of in the Stochastic tool. The K-Line (blue) represents the closing price while the D-Line (orange) is the moving average of the K-Line.
The stochastic should be your main entry signal. The ranges the lines are bound in are important metrics to see if the asset is oversold or overbought.
When the K-Line (blue) drops below 20, labelled in yellow above, it indicates a buying or long signal as the asset is oversold.
Similarly, the zone in red, which is above 80, is an indicator to sell or short the asset as it is overbought.
If the relative strength index is below 50, it generally means that the stock’s losses are greater than the gains. When the relative strength index is above 50, it generally means that the gains are greater than the losses.
So, Anything above the green line, or above the 50 level, would be a buy signal because it is an upward trend. On the other hand, anything below the 50 level shows the price on a downtrend, so you would take a sell position.
The common strategy to use with the MACD is through crossovers. Circled in green, you would want to take a buy signal when the MACD line (blue) crossess over the signal line(orange). On the flipside, take a sell position when the MACD line (blue) crossess below the signal line(orange).
However, this only works in trending markets. When the market is moving sideways, the MACD often gives false signals.
- Download “TraderVersity-MACDRSISTOCHsystem” (Zip/RAR File).
- Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
- Copy the “TraderVersity-MACDRSISTOCHsystem.tpl” file (template) to your Metatrader Directory …/templates /
- Start or restart your Metatrader Client.
- Select Chart and Timeframe where you want to test your forex system.
- Right-click on your trading chart and hover on “Template”.
- Move right to select “TraderVersity-MACDRSISTOCHsystem” trading system and strategy.
- You will see the “TraderVersity MACD RSI STOCH System” is available on your Chart.
- Step 1: Look at stochastic, then make sure both K and D lines are in oversold regions.
- Step 2: Use RSI to confirm the upward trend by making sure it is above the middle line (50).
- Step 3: Use the MACD to confirm the upward movement. You have to make sure the MACD line crosses above the signal line.
- Step 4: Ensure that both of the stochastic lines has not hit overbought levels yet.
- Step 5: Take a buy/long position.
- Step 1: First look at stochastic, then make sure both K and D lines are in overbought regions.
- Step 2: Use RSI to confirm the downward trend by making sure it is below the middle line (50).
- Step 3: Use the MACD to confirm the downward movement. You have to make sure the MACD line crosses below the signal line.
- Step 4: Ensure that both of the stochastic lines has not hit oversold levels yet.
- Step 5: Take a sell/short position once all rules are met.
- You would want to place your stop loss at the nearest swings lows while if you took a short positon.
- If you are in a long position, you would want to place your stop loss above the nearest swing high.
- However, trading always varies from individuals. This could be based on the individual’s risk tolerance and appitite. Targetitng a stop loss at the nearest swings may still accumulate large n might also want to minimize your risk by having a tighter stop-loss percentage.