How to use MACD for a Mean Reversion Trading Strategy

Рет қаралды 23,106

Күн бұрын

In this video I demonstrate how to use the MACD indicator for a mean reversion trading strategy on the S&P 500.
Specifically it identifies buying opportunities with over a 90% win rate.
Another way to trade the S&P 500 using RSI 2 : • BEST Mean Reversion In...
Grab 3 favourite strategies for FREE in my new 22 page Beat the Markets Strategy Guidebook here: www.thetransparenttrader.com/...
WEBSITE: www.thetransparenttrader.com/
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EMAIL ME: jarrod@thetransparenttrader.com
DISCLAIMER:
I am not a financial advisor and I am not offering you financial advice. I am not regulated in any way. The purpose of the content I provide is for educational purposes only.
Any information you receive is based on my own knowledge and experience in the financial markets and how you act on the information provided is your own responsibility.
I cannot be held responsible for any losses you may incur as a result of ideas taken from my content provided.

Пікірлер: 61

@jsunproter1940 Жыл бұрын

I been running some tests with this on other markets and time-frames with slightly different variations on the rules and with using options as well. I've done extremely well over the last year. I would urge anyone else reading this to look into doing further testing with this. Don't let the simplicity of this fool you as it can be quite robust.

@Samuel_eldavis 3 жыл бұрын

No need for a written out pdf with rules for this. Rules are pretty simple. But for strategies with tricky modifications it’s always appreciated:) thanks for your efforts once again!

@jamespaul4618 Жыл бұрын

0:40 buying short term drops and selling back into strengths. Interesting way to describe the up move. Buy weaknesses and sell into strengths. 5:45 chart examples

@heavenandearthPB 3 жыл бұрын

Thank you for the strategy. Love the inside bar one best. Keep up doing your videos. I enjoy the research you do in trying different angles to improve the equity line.

@TheTransparentTrader 3 жыл бұрын

Glad you're enjoying the videos. And thanks for the comment.

@jazzthedog1 3 жыл бұрын

As opposed to exiting at the first sign of profit, would it not make more sense to move to break-even or even profit, then deploy a tighter trailing stop to try and maximize the gains?

@shrajanshukla8458 3 жыл бұрын

This is a quality content especially for systems traders. As your name suggests you are really transparent by sharing info like mean reversion trend following that others wont share.

@TheTransparentTrader 3 жыл бұрын

I'm glad you find it helpful.

@covingtoncreek 2 жыл бұрын

Experimenting with this and adding a day delay to take profit is very beneficial overall.

@tonythomas8409 3 жыл бұрын

Your video content is really quality stuff and helped iron out my obvious errors which stared at my face, but didn’t recognise until your simplicity powerfully effective completely took them away...many thanks for this. Yet I believe the most critical area is yet to be covered...that is the quantum of stop loss....how to have a plan for this which is so frugal yet effective...I believe it’s the only way a trader can continue trading for years consistently....in the range of say 150 trades per month without feeling any pinch for his losses even if he lost 65% of his trades...the market though takes care of profits...please do a video on amount of stop loss and quantity at entering each trade with the aforesaid in view...thanks

@laredo4wd 2 жыл бұрын

Thank you for such quality videos, I have one comment the profit margin is very thin after allowing for commissions it turns to a losing strategy. Thank you again keep it up.

@John67kenn 3 жыл бұрын

More of the daily chart please!🔥

@TheTransparentTrader 3 жыл бұрын

Ok, more coming!

@tonythomas8409 3 жыл бұрын

I believe mean reversion works best when in early start of trade (morning), the price plunges into the 200 ma and immediately moves back rapidly (either side of it)....price then moves away from the 200 ma, but in the course of the day, more often than not comes back to touch the 200 ma...giving opportunities to intraday trades...still, your strategy looks good !

@ManifestedUniversalDestiny 2 жыл бұрын

Thanks for sharing this strategy...just wondered if you have tried this on the 4hr with a 300 pip/30 point SL...I looked at it just visually for about a year and it seemed to work out find. I wish I could write the code to test it thoroughly!!! Appreciatet your work!!!

@dionisis_20n 3 жыл бұрын

once again, love the content. I have a question. This strategy made 0.86% gain on the initial capital. That's 0.8% over the past 10 years. Is this considered a good strategy? Since we are talking about the s&p500 buying and holding the index would have made you more than 100%. I don't mean to be rude. I am genuinely asking what makes a good strategy. Personally when I develop strategies (especially for stocks and indexes) I benchmark them against the buy and hold return of the asset

@terrencechang4092 Жыл бұрын

A strategy may not be evaluated as bad solely based on the return. You can leverage to magnify the return if the drawdown is small enough. But, his strategy suffers a -0.86% max drawdown, it is pretty large relative to the return. So, this strategy is useless. Also, his backtest assumes zero commission and slippage. Even without these unavoidable costs, the return is still 0.53%.... Looking at the avg-win / avg-loss, it is 0.21, which means you need 5 wins to cover 1 loss. This absolutely contradicts the principle of trading. Do not ever trust a technical strategy could reach a 90% win rate. As long as you widen the stop loss while tighten the profit, the win ratio will increase. This guy's videos are mostly using such tricks to mislead beginners. To answer your question, using a risk-adjusted return indicator can be a good start. Like Sharpe ratio, pain-to-gain ratio. Google it and understand the rationale. The basic rule is never risking dollars to make pennies.

@tonyt3067 2 жыл бұрын

thanks for this video Jarrod. You mentioned that you did a Walk Forward Analysis video. Can you provide the link if there is one? Thanks!

@JohnSmith-ms3wb 3 жыл бұрын

Thanks.

@pauldiam0nd 2 жыл бұрын

I DIDN'T REALIZE UNTIL NOW THAT THIS HAD BEEN MY TRADING STRATEGY THIS ENTIRE TIME. (Always thought I was a "Swing Trader")

@aamirraza6503 Жыл бұрын

Its a great video.Can we apply this analysis with different forex pairs ?

@tomtownsend4210 3 жыл бұрын

I really appreciate your videos and have learned a lot about automating my systems. Have you made any progress on these drawdowns? I'm guessing you wouldn't trade this live since it's drawdown is almost as large as its profit, right? I am making a little progress by asking it to sell into strength to get out once it's a loser, but still not good enough to go live yet.

@santanusengupta2664 3 жыл бұрын

Thanks for testing on Daily chat. For a working professional, it is impractical to go below daily candle. Do you also test methods on indian indices like nifty50 or bank nifty?

@jazzthedog1 3 жыл бұрын

I programmed this in MT4 and I didn't get the same results. Very few trades actually on the daily that match this pattern. I could be my data, but it also does not show well on TickStory data either? Any clues? How many trades in total did you have?

@jmasiero77 3 жыл бұрын

I like to use time based exits for mean reversion systems in my trading, here in the b3 Brazilian stocks at least, works like a charm. Thank you for this awesome work, just love this channel!

@TheTransparentTrader 3 жыл бұрын

Thanks for your comment!

@manrae 3 жыл бұрын

I have a question... When I was looking at this strategy, I noticed that there was a signal on 9/14/20. When looking at the charts manually, the earliest the option contract could've been sold for profit was on 10/9/20. How was the back-testing accounting for contracts that needed to be held for almost a month? Were the contracts being bought months ahead automatically? Hope to hear back from you soon :)

@renejrgensen9865 3 жыл бұрын

The idea of these Mean reversian strategies are, that we find strong signals that should kick the bud of the price back to average. Because of that strength in the signals, it should be possible to make a tighter stop loss and still keep a good win rate. I'll make the robot and tjek this out.

@TheTransparentTrader 3 жыл бұрын

Let us know if you find something that works well! Thanks.

@pantelis2002 3 жыл бұрын

Idea for drop down.We open the position on the next days only is higher of trigger day .

@arnab3603 2 жыл бұрын

Can it be used as reverse for finding shorting Opportunity? When Price is above 10 Ma and below 200 ma and highest green histogram turns to red in the next. ??

@TheTransparentTrader 2 жыл бұрын

Worth testing!

@jamesbogsjr7450 2 жыл бұрын

So why TP at the next open it in Profit , it is a winner why not ride it out?

@jafxtradinginstitute6395 2 жыл бұрын

Do you do live trading or u just past data video trader ?

@manrae 3 жыл бұрын

So, do we look for a MACD reversal FIRST and then look at the other 2 rules? Or am I mistaken?

@TheTransparentTrader 3 жыл бұрын

You need all the rules to be true to take the trade. Probably easier to find the MACD reversal first though.

@patmontes2 2 жыл бұрын

Where do you take profit?

@larrybird3729 3 жыл бұрын

where did you get your backtesting data from? is it clean data? also amazing video.

@TheTransparentTrader 3 жыл бұрын

Yes It's good data. It's from Oanda.

@virtualvessel0 5 ай бұрын

Hi, I emailed my Drawdown idea to you, cheers.

@m.j.333 2 жыл бұрын

Can any of your strategies be used for binary options?

@TheTransparentTrader 2 жыл бұрын

I'm not any options trader so I haven't tried yet. Sorry, i don't know!

@shayannazemi526 2 жыл бұрын

it makes 800$ on 100k$ account in 15 years doing only 60 trades (1 trade every 90 days). Doing all of this on a chart that is almost always uptrend and the buy and hold strategy outperforms completely. why should anyone use this strategy?

@coop8845 2 жыл бұрын

Whew... a 200 point stop loss in the ES is $10,000 USD. Ouch. I see how effective it is but the fear. lol

@andychilcott7245 2 жыл бұрын

I really enjoy your videos... but most of your strategies have a very low number of trades over a long period of time. How about moving down to the 4 hour charts?

@TheTransparentTrader 2 жыл бұрын

It's worth testing!

@santyk9211 2 жыл бұрын

I think if market is always moving up it really doesn't makes sense to enter and exit frequently better is to invest and hold on..

@TheTransparentTrader 2 жыл бұрын

You're right. However the problem with buy and hold is that you will be faced with higher drawdowns than if you trade a strategy like this one. Also when trading, you can compound your gains by increasing your position size after every winning trade meaning greater profit than buy and hold.

@OneCreator87 3 жыл бұрын

I think the RSI-2 has a better chance at SP

@cyberspider78910 2 жыл бұрын

8:24 Avg# Bar between losing trades = 1664 !! what...I have to sit for 1664 days and then all I get is a losing trade...what man !

@TheTransparentTrader 2 жыл бұрын

No, you have misunderstood the report. It's bars between losing trades meaning there are many winning trades in between. Because it's a high win rate strategy, losing trades come along very rarely.

@cyberspider78910 2 жыл бұрын

@@TheTransparentTrader thanks...I actually made a script on tradingview for bar colouring based on which side bullish crossover occurred. Seem they don't liked the idea. Though I gave full credit to all concern, still it is banned. Seems the modification is too good to be true...lol

@appassets Жыл бұрын

Seems like your money management is keeping you from 98% win rates and lower drawdowns. Research Connor’s 1-2-3-4 entry approach

@13GS13 2 жыл бұрын

Your risk/reward is absolutely insane, risking dollars to make pennies.

@Jerry327565 Ай бұрын

If you program a strategy to exit only after you make a profit, then your percentage of successful trades is going to be near 100%, but if you only make 11% profit over the history of SPY (for example), and you could have made over a 1000% with buy and hold, I’d say you have a horrible strategy. I feel that I completely wasted my time watching this video and coding/testing this strategy. There is way too much garbage trading advice on KZfaq! It’s strange that there are only a couple of people pointing this out in the comments.

@crimsonactual676 Ай бұрын

I would think that your return is only 11% if you buy and don’t leverage using options