Forex filter – a tool for survival

This week I would like to present a single method, under which can filter out noise, which would otherwise lead to bad trade. At such purpose will serve us MACD.

MACD at a glance

This is an indicator, which uses two different gliding averages thereafter to determine whether these averages of each other, or zoom in vzdialujú. This writes their remoteness indicator to chart his own and that it can be construed so as a trader needs. While at first glance not sound very tempting, MACD is very versatile weapon, which has enormous uses.

Why Filter?

The objective is to use many traderov MACD signals for entry and exit from the market. Today, however, will show you how MACD is used to saving money through the filter and wait. This strategy is in contrast with the strategy of your fx broker, who has an interest that you make the most traded instruments in the largest packets precisely because of the charges, which thus collected. If you are looking at the trade just like me, you probably agree with me that sometimes it is better to wait and not feed his broker. Exactly this us a while MACD shows.

Strategy and Filter

The figure is shown as the MACD can minimize it losing team, providing an additional filter strategy for Simple Moving Average (50) in other words, SMA (50). Our long strategy is the purchase, when the daily chart closes Simple Moving Average (50) and sell when the chart closes below the SMA (50).

MACD Filter

Condition for the purchase is valid input according to the strategy SMA (50) and also confirmation by the MACD (50,150.15). We buy only when MACD is above zero, and only if it is also over its average otter (EMA15). Exactly the opposite is the case of a sale. The area is currently filtering when MACD is above zero, while below their average of the otter. In that period, trade.

Result Filtering

Strategy SMA (50) gives a lot of inputs and outputs. But when we apply filter, one thing is immediately eliminated: short positions are taboo. Furthermore, when you notice the period between 01.10.2011 and 31.03.2011 Strategy SMA (50) gave a lot of inputs, but which ended unsuccessfully. Thanks MACD filter are the following inputs and outputs unacceptable. This strategy improves the MACD SMA (50).

Finally, however, be borne in mind that no filter is perfect. MACD also gives bad signals as in the case of purchase Aussieho the end of 2010 (gray circle). Each filter is however important backtestovať, in order to find reasonable parameters. I wish you a lot of patience, discipline, and wisely, use a money management.

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