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Forex & Stock MACD COBRA Trading Strategy


The New MACD Cobra Trading Strategy is a highly effective strategy with low risk and high rewards when utilized correctly.

Trading NOTES

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The only factor that could lead to failure in the long term is if you fail to adhere to the rules.

The MACD Cobra System is remarkably straightforward and user-friendly. Once you become accustomed to it and have executed a few trades, you’ll discover that you’re spending minimal time operating with this system.

  • Time Frame: M5 or higher
  • Market: Any
System Setup

In general, the system is very easy. After checking the chart settings, you will see minimal lines and indicators, resulting in a neat and easy to read chart. Although there were originally seven indicators, only three were actually used throughout the system. The following are each required indicator and its function:

  1. EMA, or Exponential Moving Average, 12 periods applied to the “typical price”, i.e. the average of the High, Low and Close. The 12 period EMA is calculated based on the highest and lowest prices of each candle.
  2. MACD, Moving Average Divergence Convergence, default setting.
1st. The 12 period EMA

To simplify,

  • if the price surpasses the BLUE line, we exclusively initiate long trades.
  • Conversely, if the price falls below the BLUE line, we strictly engage in short trades.

This means we only purchase the currency when the price exceeds the BLUE line, and we solely sell when the price descends below the BLUE line. This is an unyielding rule that is never violated.

This fundamental approach serves two crucial purposes, rendering the system significantly more profitable than other trend-following methods.

Firstly, it steers us clear of low-probability trades. It prevents us from entering what might initially seem like favorable trade setups but, in reality, run counter to the prevailing trend, thereby diminishing the likelihood of profitability. Consequently, it effectively reduces the frequency of our losing trades by compelling us to exclusively trade in alignment with the trend.

Secondly, by relying on the precise moment when the actual price intersects the BLUE line to signify a shift in trend direction, we can swiftly enter new trends much easier.

2nd. MACD

The MACD indicator operates using three components:

  • 1st. The MACD Line
  • 2nd. The Signal Line
  • 3rd. The Histogram

The first component, the “MACD” line, represents the variance between two moving averages, typically the 12-period EMA and 26-period EMA. It’s crucial to differentiate between “MACD the indicator” and “MACD the line.”

The second component, the “Signal Line,” is the moving average of the MACD line, typically a 9-period EMA. In simpler terms, it’s the moving average of the MACD.

Consequently, the MACD line is considered the “faster” line, whereas the Signal Line is regarded as the “slower” line.

When these two lines come together, they are said to be CONVERGING, and when they move away from each other, they are DIVERGING. So, when the MACD Line and the Signal Line move apart, or indicating a DIVERGING trend, it suggests that the market trend is strengthening, and traders should prepare to enter the market if there are price action signals aligning with the market trend indicated by the MACD indicator. This is one of the unique features of the MACD indicator, as it can identify trends while measuring their strength simultaneously. We will leverage this feature in the MACD Cobra strategy.

3rd. The MACD Histogram. The discrepancy between the two lines is depicted on the histogram. If the MACD histogram is plotted above the zero line, it signals an uptrend. Conversely, if the MACD histogram is plotted below the zero line, it indicates a downtrend.


MACD COBRA Trading Strategy

The New MACD Cobra Trading Strategy is a highly effective strategy with low risk and high rewards when utilized correctly. The only factor that could lead to failure in the long term is if you fail to adhere to the rules.

The MACD Cobra System is remarkably straightforward and user-friendly. Once you become accustomed to it and have executed a few trades, you’ll discover that you’re spending minimal time operating with this system.

BUY Rules

The basic entry criteria are very simple.

  • First of all, we need to determine whether the two lines, the MACD line, orthe “faster” line, and the Signal Line, or the “slower” line are DIVERGING, or move away from each other. So, when the MACD Line and the Signal Line move apart, or indicating a DIVERGING trend, it suggests that the market trend is strengthening, and traders should prepare to enter the market if there are price action signals aligning with the market trend indicated by the MACD indicator and the BLUE lines. In this case, it’s a Bullish Trend.
  • 2nd. The Histogram illustrates the difference between the two lines. In this case, the MACD histogram should be plotted above the zero line, as confirmation, signaling an uptrend.
  • 3rd. The price has moved above the BLUE lines. Once we establish our trading direction, and In this case, it’s a Bullish Trend, we search for the moment when the price moves above of the BLUE buffer zone.
  • So we await the price to close outside and above the BLUE buffer zone.
  • As you can see, the price closed above the BLUE zone. Therefore, the trader should promptly enter the market with a BUY position at the opening of the next candle. Don’t forget to place your stop loss below the BLUE zone line with a minimum target profit of at least 2 times your trading risk.

It must always be remembered that the fundamental concept in this strategy is to wait for the price to break out of the BLUE zone before entering the market with a trade.

SELL Rules

  • First of all, If the MACD line crosses below the signal line, then it’s time to sell because the market is beginning a Bearish trend. Next, we need to determine whether the two lines, (the MACD line, or the “faster” line, and the Signal Line, or the “slower” line are DIVERGING, or move away from each other. So, the MACD line crosses below the signal line and move apart, or indicating a DIVERGING trend, it suggests that the bearish trend is strengthening, and traders should prepare to enter the market if there are price action signals aligning with the market trend indicated by the MACD indicator and the BLUE lines. In this case, it’s a Bearish Trend.
  • 2nd. The Histogram illustrates the difference between the two lines. In this case, the MACD histogram should be plotted below the zero line, as confirmation, signaling a downtrend.
  • In this example, The price has moved below the BLUE lines. Once we establish our trading direction, and In this case, it’s a Bearish Trend, we search for the moment when the price moves below of the BLUE buffer zone.
  • As you can see, the price closed below the BLUE zone. Therefore, the trader should promptly enter the market with a SELL position at the opening of the next candle.
  • Don’t forget to place your stop loss above the BLUE zone line with a minimum target profit of at least 2 times your trading risk.
Trading NOTES

This “MACD Cobra Trading strategy” is an extremely low risk, high reward strategy which can and will change your life if you use it properly. The only thing that could make this system fail over the long term is you not sticking to the rules. that’s it!

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