MAC Trading Method

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MAC Trading Method

Postby Tempestus » Mon Jan 30, 2012 4:14 pm

Hello FOREX traders!

My first post here, and I must thank Edward for this great site he has provided.

This trading strategy is primarily based upon a method created by Jacob Bernstein in his recent book 'The Ultimate Day Trader'. I have taken one of his ideas and 'synthesized' it a little to fit me better. I do not take credit for fully developing the idea for the MAC strategy.

Bernstein creates his strategies based upon what he calls his 'STF Method' or Set-up, Trigger, and Follow-through. This allows the trader to follow his/her system from picking their trades all the way to exiting them in 3 steps.

Without further adieu..

The MAC (Moving Average Channel) Trading Strategy

Markets: Any
Time-frame: Any
Indicators:
Rate of Change (28) with an applied Simple Moving Average (28)
Simple Moving Average (10, high) Simple Moving Average (8, low) -> This is the Channel
Bollinger Bands (20, 2.0 STD)
Pivot Points (Floor)

Set Up

- Two bars closing outside (above or below) the MAC but remaining within the Bollinger Bands
- Any bar that closes back inside the MAC cancels the set up and you must wait for a new set up to occur. Any open orders that have not been filled at this point are also cancelled.

Trigger

- Long: The ROC must be above its SMA -> Place order on the high of the 2nd set up bar
- Short: The ROC must be below its SMA -> Place order on the low of the 2nd set up bar
- If the ROC has not confirmed the set up WAIT for it to cross its moving average and place an order at the high/low of the last bar
- If while waiting for the ROC to cross your set up becomes invalid by a close inside the MAC, wait for a new set up to find another trigger

Follow-Through

- Our stop-loss is placed at the bottom channel line (when long) or the top channel line (when short)
- We move our stop-loss after each close with the moving channel.
- We exit our position (either at a loss or profit) when a bar closes inside the MAC

Additional Discretionary Rules

- Never go long if price is trading above R2 or R3
- Never go short if price is trading below S2 or S3
- A bar that closes outside the MAC but also outside of our Bollinger Bands does not count as set-up bar. (This helps filter out actual momentum from volatility spikes in price)

Image



Note: This system has not been thoroughly back-tested by myself, I am currently in the process of doing so manually.
Tempestus
 
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Re: MAC Trading Method

Postby Midnite Rider » Tue Jan 31, 2012 2:08 pm

Hi Tempestus,
I like your system. Seems that you're using it on a 5 min. chart. Would 20 pips be a realistic goal on the 5 min. time frame?
Also , I'm using a Meta Trader4 chart and it doesn't have the Rate of Change Indicator on it. Could you recommend another indicator to use that would serve the purpose along with the 28 SMA Perhaps RSI or Force Index? Thank you for your time!
Midnite Rider
 
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Re: MAC Trading Method

Postby Tempestus » Fri Feb 03, 2012 1:00 pm

The exit devised here is to close your position when the move starts to turn over. This can be anywhere from 10, 20, to even 60 or 100 pips. A great strategy would be to divide up your position and sell some off at a more structured point using support and resistance or whatever you may choose. I have found that always searching for a specific target (like 15 pips every time) will hinder your system. Flexibility with your exits is very important so you can make the most out of every trade.

Rate of Change is also known as the Momentum indicator on MT4, so you can use that!
Tempestus
 
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Re: MAC Trading Method

Postby ajaxfinancial » Thu Feb 16, 2012 6:55 am

The most important investment strategy for long term success in the Forex market is to determine how much risk you are comfortable handling.The Forex market is considered a high risk investment vehicle because of the volume of daily price movements and the leverage that is available in the Forex market.
ajaxfinancial
 
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Re: MAC Trading Method

Postby ForexLion » Tue Mar 13, 2012 9:51 am

Tempestus, Thank you so much for this wonderful contribution.
ForexLion
 
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Re: MAC Trading Method

Postby firsoves » Tue Jun 12, 2012 11:50 am

Hello!

Can you give a reference to the indicators that you use?
firsoves
 
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Re: MAC Trading Method

Postby cmoney5792 » Wed Aug 15, 2012 12:42 am

Hi what a great system you have mate. I was wondering what time frames is best for this strategy and which pairs are also best.. Thank You in advance
cmoney5792
 
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