Moving Average MACD Combo

In theory, trend trading is easy. All you need to do is keep on buying when you see the price rising higher and keep on selling when you see it breaking lower. In practice, however, it is far more difficult to do successfully. The greatest fear for trend traders is getting into a trend too late, that is, at the point of exhaustion. Yet despite these difficulties, trend trading is probably one of the most popular styles of trading because when a trend develops, whether on a short-term or long-term
basis, it can last for hours, days and even months.

Here we'll cover a strategy that will help you get in on a trend at the right time while at the same time giving us clear entry and exit levels. This strategy is called the moving average MACD combo.

Overview

The MACD combo strategy involves using two sets of moving averages (MA) for the setup:
• 50 simple moving average (SMA) - The signal line that triggers the trades.
• 100 SMA - Gives a clear trend signal.
The actual time period of the SMA depends on the chart that you use. This strategy works best on hourly and daily charts. The main premise of the strategy is to buy or sell only when the price crosses the moving averages in the direction of the trend.
Rules for a Long Trade

1. Wait for the currency to trade above both the 50 SMA and 100 SMA.
2. Once the price has broken above the closest SMA by 10 pips or more, enter long if MACDhas crossed to positive within the last five bars, otherwise wait for the next MACD signal.
3. Set the initial stop at a five-bar low from the entry.
4. Exit half of the position at two times risk; move the stop to breakeven.
5. Exit the second half when the price breaks below the 50 SMA by 10 pips.

Rules for a Short Trade

1. Wait for the currency to trade below both the 50 SMA and 100 SMA.
2. Once the price has broken below the closest SMA by 10 pips or more, enter short if MACD has crossed to negative within the last five bars; otherwise, wait for the next MACD signal.
3. Set the initial stop at five-bar high from entry.
4. Exit half of the position at two times risk; move the stop to breakeven.
5. Exit the remaining position when the price breaks back above the 50 SMA by 10 pips. Donot take the trade if the price is simply trading between the 50 SMA and 100 SMA.

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