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MACD Indicator Divergence Trading Strategy That Works – Video Tutorial

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MACD indicator divergence trading strategy
MACD indicator divergence trading strategy

Here’s a MACD indicator divergence trading strategy that’s a little different than what you’ve seen before, but it works beautifully. This MACD histogram tutorial video provides you with some excellent day trading and swing trading methods. Whether you trade the Forex, the stock market, or E-minis, this tutorial may help take your trading to the next level.

Enjoy this brief video about the MACD indicator how to use it as one piece of an overall trading methodology.

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VIDEO TRANSCRIPT

Today we are going to talk about the MACD indicator divergence trading strategy, and why it often doesn’t work and when it can work.

First of all let’s talk about why they don’t necessarily work. Lot of people use them as an entry for going long or short. For example here we have a little bit of a higher high, and then we go down to the MACD indicator, and MACD has a lower high. So that’s your divergence, and does it work well?

It looks pretty good, doesn’t it? By the way, you’ve got two very red bars there, and so you can look at your candle stick bars and say wow, yup we’ve got wide range bars. Very bearish bars, and even volume is picking up as we go to the downside. It’s looking pretty good on many different fronts, and then of course the market comes around, and up, does seem to go down a little bit. Wait, wait, wait, no, going back up, up, up, up, up, up. Okay, so did not work, made a higher high after that.

MACD INDICATOR HOW TO USE IT

The MACD indicator is made up of traditionally 2 lines and also the MACD histogram, but you can add a third element as well. You’ve got your MACD line, I’ve got it red here, and the MACD line is simply the difference between two exponential moving averages. And I’ve got them up here, these are the traditional numbers, 12 and 26. So the difference between these 2 moving averages will be your MACD line.

I’ve got them plotted here the green line is the 12 period EMA. And the red line is the 26 EMA. When they cross, such as right there, then your MACD line, the red line will cross the 0 line. And the 0 line is right there. That’s the first thing is that that’s what the 0 line means is that there is 0 difference between these 2 moving averages.

As long as there is space between those 2 moving averages, in this case with the 12 EMA above the 26 EMA. Then the MACD line, my red line will be above 0. Now the black line here, that’s called the signal line, and that’s just a 9 period moving average of the MACD line of the red line. It’s just a 9 period moving average of the red line.

THE MACD HISTOGRAM

That’s how you read the indicator, now you can also put in, what they call a MACD histogram or, that’s a horrible name for it, it’s really, histogram just is a way of plotting something, and you can plot pretty much anything as a histogram. But a lot of times, the indicator is called a histogram

A better term, far more accurate term would be the difference or “diff” because that’s plotting the difference between these 2 lines. MACD line and the signal line, we are not going to talk about that today. But I want to just focus on our topic of divergences here today.

MACD INDICATOR DIVERGENCE TRADING STRATEGY THAT DOESN’T WORK.

We saw that didn’t work. That’s because that now that you understand how the indicator works. All this is doing is measuring acceleration or deceleration. The MACD stands for Moving Average Convergence Divergence. And that is an excellent term for it, because it is measuring the space between these 2 moving averages.

The 12 moving averages moving away from the 26 moving average, you see then that your MACD line will be going up. Now, so there is a lot of space, here it’s getting bigger and bigger, and then it doesn’t get so big, right. What happens is they don’t cross or anything, but now they are actually converging a little bit. The space between them is not as big.

THE MACD INDICATOR STRATEGY MEASURES ACCELERATION

So it’s getting a little bit, you know what, let’s bring this really big upscale here, and maybe we can show it a little easier. So in other words the difference here, you see it’s, well you can see, even on the 12 period moving average. Kind of angles in, whereas before it’s angling up, and then it angles back in. so that’s why the MACD line kind of goes flatter here. It’s just because the distance between the two lines is starting to close a little bit. Okay, then they open back up again and the MACD line starts going back up. So it’s measuring acceleration, if you will.

So you have to ask yourself well how significant, is that really in the market move? Does that mean the market’s going to reverse, just because 2 moving averages started coming closer together a little bit? The market go through cycles, they wiggle up, they wiggle down. They oscillate up, they oscillate down.

DAY TRADING OR SWING TRADING THE MACD INDICATOR DIVERGENCE

If the market was in continual, acceleration move, it can only sustain that for so long. A trend accelerating and continuing to accelerating without taking any rest is really not sustainable. And those usually turn into exhaustion moves in fact.

A trend that is more sustainable, that will last longer has these natural oscillations of acceleration, deceleration. And that is actually a healthier trend or a more sustainable trend, a trend that can last longer because people are coming in over more period of time. If you have everybody coming all at once, then you know essentially theoretically there is nobody left to come in. and the trend ends sooner.

Then we come over here and we got another one. Now that one works out pretty good. So here if we look at this one really quick, you’ll see that we have a higher high and MACD a lower high. So here is the big question, how would we determine that this one we looked at before, would not work, and this one would. Some people call this a triple divergence MACD indicator divergence trading strategy.

WHICH MACD DIVERGENCE STRATEGIES WORK AND WHICH DON’T

This is where our first divergence was right here. And if you’ll notice, what I’ve done is I brought up a weekly chart of the same market over on the right now. And this is going to be our key, is that we are going to be watching MACD on the longer term chart as well.

We have the daily on the left, weekly on the right. Here is our first divergence, and if you’ll notice MACD is coming down a little bit because there’s a little bit of a retrace on the weekly. But again that’s normal. Normal oscillations. And that one did not work. But MACD is still up, and it’s still above its signal line, and so the market continues to go up.

There are several confirmations:

  • We get the MACD line crossing below the signal line on the weekly chart.
  • There’s a nice candlestick pattern on the daily, but we had that on the previous signal as well.
  • The market is getting below both moving averages. We are getting below the 26 EMA on the daily chart. And we had that opportunity as well over on the last one.

MULTIPLE TIME FRAMES PROVIDE EXCELLENT CONFIRMATION

What’s most important is that we have multiple timeframes confirming this trade. And the cross of the MACD line with the signal line on the weekly, that’s what I am looking for. I’ve found it to be the best MACD indicator divergence trading strategy.

Give it a try, I think that you’ll find that it’s a much more precise way of conforming your setups, whether they’ll be MACD divergences or anything else on the shorter timeframe.

By the way, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

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Fibonacci Trading Strategy Fibonacci Extensions – Video Lesson

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Fibonacci trading strategy Forex with Fibonacci extensions
Fibonacci trading strategy Forex with Fibonacci extensions

A great Fibonacci trading strategy is to use Fibonacci Extensions to determine your exits.  Whether you’re trading stocks, futures or Fibonacci Extensions Forex, this video can help you with your trading.

Enjoy this tutorial about a simple Fibonacci trading strategy intraday and also for swing trading to integrate with a good overall trading method.

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VIDEO TRANSCRIPTION

Welcome to this tutorial on Fibonacci Trading Strategy that helps you to find the best place to exit your trades using Fibonacci extensions. I often hear people struggling with where to get into their trades, I actually find that very easy. That’s actually one of my specialties and I’ll be happy to share that with you as well on another video.

But today’s video is about where to get out. In this one, I find is much more challenging for more traders, in fact even a lot of veteran traders that I talked to, and some who are retired say that they never really mastered exactly when to get out of a trade. So I am going to give you some help with that using Fibonacci extensions Forex, stocks and futures, and we’ll throw little else in there too.

USING FIBONACCI EXTENSIONS TO FIND EXCELLENT EXITS FOR YOUR TRADES

Wer’e going to use the Fibonacci extensions tool as our primary tool for determining where to get out. Now when you do this, actually let me go back here and turn that off, oops there we go, that’s great. Ok, so let’s talk about how to draw this thing correctly.

You can do it many different ways because Fibonacci projections are all relative but the most traditional way and the way that I personally like to do it as well is to take a low, the lowest low and as you start making an up move, then go from the lowest low to that high, and then down to the higher low. So what we are doing is we’re starting with a new impulse move, a reversal if you will. Because we’ve been going down for a long time.

FIBONACCI TRADING STRATEGY: HOW TO DRAW FIBONACCI EXTENSIONS

What we do is we use a three point drawing tool as you saw there. If you didn’t catch it, just review. You can rewind here. The beauty of video.The lowest low after a move down and then we go to the next high. Usually will be a little bit of a higher high than the previous swing high. It doesn’t necessarily have to be, but it is actually good if it is. And then the higher low, the first higher low of that reversal.

Those are the 3 points. 1, 2, 3. Then instead of measuring retracement levels for our Fibonacci trading strategy, which would be below this high, it actually draws levels above it. And so it is drawing targets. So now we are going long, we are looking for longs and we’re looking for potential profit targets. The price levels where we might want to take profits.

WHICH LEVELS WORK AND WHICH DON’T

Not every level is going to provide a place where the market stops and turns around and puts in a high or a wave, or a cycle, but a lot of them do. So the first one that we always look at, or that I look at is the 100%. That’s called the measured move. And it’s quite often considered an excellent Fibonacci trading strategy, but look this time, hey let’s just call what it is, the market didn’t even acknowledge it. It just sliced right through it, and pretended like it wasn’t even there.

it hesitates at the 150 but it really finds it’s high at the 200%. And what that literally means, the 200% means that from this level here, if we were to draw just this horizontal line from here and then go up, ok that’s your initial impulse move to the upside. So you take that and double it, and that would be your 200% move. 100% will be the same length of that low.

SIGNIFICANT SUPPORT RESISTANCE

That’s the place where we first get real significant resistance. Then it comes back down and where do we find our support? At the 150. So sure enough, these 2 levels worked quite nicely, goes back up to 200 and, it has a little trouble there. What’s happening is the market participants are aware of this high and are a little uncertain as to whether there’s going to be more buying traction. Because let’s face it, market already moved up 200% of the initial impulse move.

It’s a little harder for to continue going, the psychological, the mass psychology behind that is that people are just wondering if this is getting to be over bought now if there’s too many people already onboard, are there enough buyers to come in and continue the market to move up.

The market goes down 3 bars and then market decides, yup we believe it is. Again slices through 300 but now this is something that you’ll see often with support resistance levels. If it gets real aggressive like it does here, then it will kind of, and it has to be an aggressive move like this, at a very sharp angle. What’ll happen is it will often then kind of retrace a little bit or even just go sideways and pause.

IT DOESN’T ALWAYS WORK RIGHT AWAY, BUT 2 TIME’S A CHARM

The same thing that happened here very strong, a vertical move, and then the market comes back to acknowledge the 150. It sliced through it, comes back to it and acknowledge the 150. And again it’s an uncertainty thing of people saying wow there was a lot of energy there, may be too much. And then we come back up and we get up to, there we go, all the way back up to 500, and we put in a wave 7. Now that’s an extended move.

The difference between Fibonacci retracements and extensions are that Fibonacci retracements are generally considered entry points. Buy points, sell points, where you get in to the market. Whereas Fibonacci extensions like this, that are marking levels above whatever our price currently is on the hard right edge of the screen. Those are considered potential profit zones. Now they don’t work by themselves. You’ve got to put in other things with them.

HOW TO TIME YOUR ENTRIES AND EXITS WHEN USING FIBONACCI RETRACEMENTS AND EXTENSIONS

The other important thing when using a Fibonacci trading strategy is cycles. Because price alone, price levels, they are very important. As we’ve seen though sometimes they work, sometimes they don’t. They do work a lot. So they are important to see. But the other thing you absolutely critically need is time.

What I mean by that is there’s two axis on the chart. Over here we have price and that’s fine. And that’s what these Fibonacci extension lines are, is they are price levels. But that is only half the picture. The other half of the picture on a chart is what, it’s time. So we got price over there, let me move my chart up a little bit here, so you can see time. And down here, I mean it’s a two dimensional object right. So here we have time. Very few people actually talk much about time.

MY TIMING  TOOL

If you’re interested in the timing tool I use, we are almost done here. We are already 9 minutes in this 10 minutes video. I’ll be happy to make that available to you. It’s more than I can share in 10 minutes and we keep all these videos to 10 minutes. But I have a free webinar, where I offer that and give you the indicator and how to use it and give you a nice, it’s about a 30 to 45 minute tutorial on how to use it. Setting up the indicator is really easy, works on any chart, any charting software, but how to trade it is a little more, it’s not hard but it’s not intuitive on how to do it. So I give you a tutorial and that’s all free.

So feel free to, just send me an email Barry@TopDogTrading.com, and I’ll send you information on when the next webinar is for that, if well if we are still offering it. You know these videos stay free or so. So by the time you see this video I may no longer be offering it. But send an email anyway to check it out.

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Swing Trading Strategies for the Best Trend Trading – Video Tutorial

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The Best Trend Trading and Swing Trading Strategies that Work
The Best Trend Trading and Swing Trading Strategies that Work

Swing trading strategies that work provide the best trend trading system. This swing trading tutorial video provides you with some excellent swing trading methods. Whether you’re trading stocks, futures or Forex, this video can help you with your trading.

Enjoy this tutorial about a simple swing trading strategy and how to use it in creating a trend trading system.

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VIDEO TRANSCRIPTION

Welcome to this video on Swing Trading Strategies. We are going to focus on how to have a high probability, best trend trading signal and when that trend is going to end. This is a market geometry pattern that works very, very well. I find that it works tremendously for swing trading using daily charts, weekly charts, monthly charts and you can use it for stocks, forex, futures, commodities. I have got this stock up here, Tesla.

SWING TRADING STRATEGIES THAT WORK

We go up to the drawing tools, and you’ll see that we’ve got all these different tools here. So I go to regression channel.  This is one of the best trend trading tools. Click on that and then I click on a high. I want to click on the highest bar there. Get it, just right there, there we go, and then drag it down to. Now here is one of the things I want to show you. Alright, so then as you can see it draws these lines and it kind of, well it just kind of goes across the market like this where we can see that there is boundaries.

And let’s look what those boundaries look like. I’m going to format this, under format. And what I use is I use a standard deviation of 2 for both the upper and the lower channel. I don’t actually draw the mid channel, or the midline, the actual regression line. This is one of my favorite swing trading strategies.

The basic idea is that we are looking for the market to increase in volatility outside of a regression channel of a 2 percent standard deviation. And that is a pretty good number to use. That’s the one that I always use. So as long as it stays in there, now you’ll see obviously here we get, we approach breaking out here and here. But it never actually breaks completely out for the best trend trading signals.

THE BEST TREND TRADING SIGNALS

The first time it breaks out is right here. And then it retraces back down, and then it goes up. So here it pierces, I call this a pierce, instead of a break. And the real distinction there is that you got to allow the market a little bit of a wiggle room for standard error that might make.

Here put in a high, but it comes right back down. It puts in high, it comes back right down. Here comes, puts in a high but stays outside of the regression channel. That’s the key to these swing trading strategies. That’s what I am looking for.

This is the same chart and I am just going to do another one here. Go to our drawing tools, choose regression channel, I’m going to start with the lowest bar, doesn’t really matter where you touch the bar, and then we go to the highest one there, going to click again.

USING DRAWING TOOLS FOR TREND TRADING

Notice how far the channels are away from price action. So it’s really given a lot of room to move there, the wiggles, the ups, the downs. And that’s good, that’s 2 standard deviations. So that’s what we want. And then it comes back down. This marks the boundaries for great swing trading strategies.

Here you have a little, basically it’s called kind of trade, if you wanted to take that, but that’s not the best trend trading signal. It comes back up, and then, but it stays outside of them, and goes back down again. I am going to have to take my arrows off of there, otherwise, well let me show you what happened.

So the reason I am showing you this is that I want to show you that this is a more of a big picture, broad stroke type of indication. I find it to be one of the better trend trading indicators or swing trading indicators, and it’s a relatively simple swing trading strategy and simple trend following strategy for Forex, stocks and futures.

MEASURING SWING TRADING VOLATILITY

You’re just mapping a certain percentage of mathematical variance that you are allowing the markets to make in their wiggles. And generally if they break that level of volatility, something significant is happening. It can then change the long term direction of the market and lead to excellent swing trading strategies. But it’s not clean to help you to pinpoint with precise accuracy exactly where you should give in or exactly where you should get out. So that’s one thing you need to add.

This should be used with another type of swing trading strategies indicator or combination of indicators, price patterns, whatever you like to trade with in order to then choose the precise place where you want to take those trend following trading strategies. If you have a good trading method, and add this to it, perhaps it will help you do trend trading for a living. But it is very good at helping you to see the trend while still allowing the market, generations that are normal.

By the way, if you are interested in indicator that I use personally for precise, very precise entries and exits. I am happy to share that with you. Just send me an email there at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this tutorial on swing trading strategies that work and showing you the best trend trading? Enter your answer in the COMMENTS section at the bottom of this page.

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Fibonacci Forex Trading Strategies that Work – Video Tutorial

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Fibonacci Forex trading strategies that work
Fibonacci Forex trading strategies that work

Fibonacci Forex trading strategies that work require a couple extra little-known, but simple, techniques to make them profitable. This Fibonacci Forex tutorial video provides you with those techniques. Whether you’re trading Fibonacci retracements or Fibonacci extensions, this video will show you how to use Forex Fibonacci numbers that work in real life.

Enjoy this tutorial about Fibonacci Forex trading strategies that work.

SORRY: You’ll notice some “clicking” sounds in the video, but the information is worth putting up with the click sounds! That was a technical problem we fixed on future videos. 

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VIDEO TRANSCRIPT

Welcome to this brief tutorial on Fibonacci Forex trading strategies that work. We are going to go a little beyond the basics of Fibonacci today. And I am going to share with you, well I wouldn’t say it’s advanced but it’s definitely intermediate, so let’s jump right into it.

FIBONACCI FOREX TRADING STRATEGIES THAT WORK

So one of the most basic techniques for using Forex Fibonacci numbers is the good old Fibonacci retracement. So we start with a major low on the chart, going to a major high, and it draws retracements back in the direction of the movement. So for example this is what’s called our impulse move. From a low to a high, and then it draws these retracement levels. This is the basic stuff. Alright, and that’s basically what percentage of the move the market then comes back down.

We’re going to combine 2 different Fibonacci strategies on 2 different time intervals. So getting a little fancy there. You’ll need to make sure you have Fibonacci trading software on your charting platform. We did this on the big scale, and these lines are going to stay here. Now basically Fibonacci levels, I just trade as support resistance. Depending on which side of the market trading, they are either support or resistance. Let’s take that off, and actually no let’s move forward a little bit.

FIBONACCI FOREX TUTORIAL

I’ll just show you what happens here in the future, and just to demonstrate you that yes these levels really do come into play, and so we see that the market came down to this level, and then it just really found support there for quite a while. And then it broke down, went down to the next level. Then went down to the next level.

These support levels, these turned out to be support levels, they really  are providing places where the market is looking, people are watching this, lot of people trade a 60 minute chart on the Euro or US dollar. And so kind of has a self-fulfilling prophecy, and a lot of people use these retracement levels.

Now let’s move beyond that. We have our 5 minute chart here, let’s look for some kind of a trending pattern. What we want is some kind of move where we can draw levels for Forex Fibonacci trading. We’re going to do 2 different things here.

FIBONACCI EXTENSIONS AND FIBONACCI RETRACEMENTS

  1. First of all, as you see we’ve already changed the time intervals, this is the energy of scale. We are looking at the same market, but on a different scale, 60 minute down to a 5 minute.
  2. The 2nd thing we are going to do is we are going to use a different Fibonacci technique. So now instead of Fibonacci retracements, we are going to do the Fibonacci extension. So now we do it from this high to that low, there’s your impulse move, okay again impulse move, and then we are going to come back up here to this high.

The Fibonacci extension is a 3 point drawing tool. We’ll be looking for levels above. Now we are looking for levels below. In other words, really Fibonacci extension is often used for profit targets. So let’s take a look and see what we got here, and there you go. So you’ll see that it’s put in this level here. That’s your 100% move. It’s called a measured move, and then 150%. Alright, now when I went to a 100%, notice, actually first of all notice couple things.

USING MULTIPLE TIME FRAMES FOR YOUR FIBONACCI FOREX STRATEGY

What are these horizontal lines here? Well those are the lines that we drew from our 60 minute chart. They are still on there. So if I go back, you see the blue line there. They are still on there, they are still on there. Alright now come back here. Messing up my scaling.

The point is where did we get our impulse move, there is our impulse move and then it draws levels into the future for targets. There’s a down move, and we’re looking to go short, and we are looking for profit targets, and again support resistance but notice that the market responded to this Fibonacci trading strategy.

That’s the level we drew on our 5 minute chart. The Fibonacci extensions. And these lines, they go before that, that’s the one we drew from our 60 minute chart, the retracements. so you’ll see that indeed the market kind of got through that level a little bit but then it came back and acknowledged it. Retraced to it. Then again same thing happens here at the 100% level. It goes through it but then it comes back and acknowledges it, and you’ll find that a lot.

ADVANCED APPLICATION OF FIBONACCI EXTENSTIONS

What’s really interesting and this is really kind of the point of this particular lesson is that we continue on down. And now we put in our wave 7 and a failed 9 here. But what happens, we have a cluster, we have a cluster of, you can see a black and red line.

They’re very close together but I think you can see those. From our extension on the 5 minute chart, we’ve got a 150% extension, and that’s the black line. Then we’ve got the red line from the 60 minute chart Fibonacci retracement and that creates a cluster. And there the market really finds tremendous support, it comes down to it, bounces off, comes down to it and then bounces back up again. S

That creates a Fibonacci cluster, which is one of the best Fibonacci Forex trading strategies that work. Let’s see what else happens here, just move it forward a little bit. It comes back and look at that, it’s again 1, 2, 3, 4. Really haven’t troubled again through that isn’t it. And as we go through, oh it finally makes a false breakout. So we finally get a breakup but it’s a false one. That goes right back up to the measured with the 100% level.

Fibonacci clusters provide an important Fibonacci Forex strategy.

Think of them as magnets. Most people treat them as the market, or well the alliance repelling the market. When the market gets there, it pushes it away. Changes the polarity of the magnet. So it actually will, the market will go there and the reason is this is not any kind of you know electromagnetic dynamics going out. It’s just purely the fact that a lot of people use these techniques and they have a self-fulfilling prophecy because these are the levels where masses of market participants are looking to buy and sell.

That is a way of combining 2 different types of Fibonacci techniques, 2 different timeframes and the reason the clusters work and let me finish with this, the reason that clusters work is because you’ll have one group of traders for example using a 60 minute chart, and they’ll draw those Fibonacci retracements.

THE LOGIC BEHIND THE FIBONACCI CLUSTERS

What makes Fibonacci Forex trading strategies that work with these clusters? You’ll have another group of traders maybe using 5 minute chart, and they’ll draw those Fibonacci extensions. So the clusters don’t work because there’s 2 lines on the chart. Wow. Now the lines mean nothing. Nothing on your chart makes the market do anything.

It’s what those levels represent. And what they represent are what masses and masses of traders around the world are seeing and therefore once they see it, they respond to it. They buy off of it. They short off of it. They take profits into it. And so when you got clusters, it’s just that many more market participants and that’s the reason that it actually works. That’s the market logic to it. So it’s no magic to it. It’s actually very very very simple and very logical.

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