How to Set Up and Trade the 4-Hour MACD Forex Strategy in Olymp Trade.

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What is the 4-Hour MACD Forex Strategy?

The 4-Hour MACD Forex Strategy is a trading strategy on the 4-Hour price chart.

This trading strategy focuses on pinpointing trading patterns on the MACD indicator other than on the price.

If you are just learning about trading indicators for the first time, MACD is an oscillator in Forex. Best known as Moving Average Convergence and Divergence indicator.

The 4-Hour MACD Forex trading strategy uses 5 moving averages which take the role of support and resistance.

It also uses specific MACD indicator settings.

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Here are the 5 moving averages used in the 4-Hour MACD Forex Strategy:

  • 365-period Exponential Moving Average (EMA 365).
  • 200-period Simple Moving Average (SMA 200).
  • 89-period Simple Moving Average (SMA 89).
  • 21-period Exponential Moving Average (EMA 21).
  • 8-period Exponential Moving Average (EMA 8).

Here also, are the specific settings for the MACD indicator used in the 4-Hour MACD Forex Strategy:

  • Fast MACD EMA set at 5.
  • Slow MACD EMA set at 13.
  • MACD Signal Line set at 1.
  • Set Horizontal Lines at -0.0015, -0.0030, -0.0045, +0.0015, +0.0030 and +0.0045 MACD Levels.

Worth noting is the fact that the 4-Hour MACD Forex Strategy can be used to pinpoint so many trade setups.

However, the best for beginners and the most prominent of all is using the strategy to pick trend continuation trade setups.

4-Hour MACD Forex Strategy Trade Setups.

If used to pinpoint trend continuation trade setups, the 4-Hour Forex strategy is simple. You must be wondering how bullish and bearish trade setups look like.

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Here is your answer:

  • Bullish setup: The moving averages should be spreading out nicely in order from the lowest period to the highest from above downwards. The price should be above SMA 89 and the moving averages which are below that SMA 89, while the MACD histogram above the zero line. MACD histogram should fall but not below the zero line. The MACD histogram should then rise while still above the zero line to complete the bullish signal.
  • Bearish setup: The moving averages should be spreading out nicely in order from the lowest period to the highest from below upwards. The price should be below SMA 89 and the moving averages which are above SMA 89, while the MACD histogram below the zero line. MACD histogram should rise but not above the zero line. The MACD histogram should then fall while still below the zero line to complete the bearish signal.

Is that enough knowledge to help you trade the 4-Hour MACD Forex Strategy profitably?

I guess not, and so you must be wondering how to set up and trade the strategy in your Olymp Trade account.

The good news is that in this post, I will show you exactly how to set up and trade the 4-Hour MACD Forex strategy in Olymp Trade.

Setting Up and Trading the 4-Hour MACD Forex Strategy in Olymp Trade.

Setting Up and Trading the 4-Hour MACD Forex Strategy in Olymp Trade.

I know everything from the introduction seems complex and sophisticated.

In this section, everything will be demystified and you will realize how easy this strategy is.

We shall unmask every hidden meaning by explaining every bit.

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That’s so that by the time you are done reading through the guide, you would appreciate how simple the strategy actually is.

  1. Change the chart timeframe to H4.

The first thing to do is to set up your chart ready for trading the 4-Hour MACD Forex strategy.

The setting up of the chart involves changing the chart timeframe, setting up the five moving averages, and applying the MACD indicator settings required for this strategy.

The 4-Hour MACD Forex Strategy is a trading technique applicable to the 4-Hour price chart.

Therefore, changing the chart timeframe to H4 is inevitable.

Click on the timeframe tab and choose H4.

You will have finished the first step in setting up your chart ready for the strategy, then proceed to the next step.

  1. Set Up the Five Moving Averages.

In the second step, we shall deal with setting up the five moving averages.

Here, click on the indicators’ tab and choose Moving Average five times.

Adjust three of them to EMA types of periods 365, 21, and 8. Adjust the remaining two to SMA types of periods 200 and 89.

That will be all about setting up the five moving averages required for the 4-Hour MACD Forex strategy. You can proceed to set up the MACD indicator.

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  1. Set Up the Moving Average Convergence and Divergence (MACD) Indicator.

The third part of setting up the chart ready for the 4-Hour MACD Forex strategy is setting up the MACD indicator.

Here, you will need to apply the specific MACD settings as specified in the introduction.

Click on the indicators’ tab and choose MACD. Adjust the fast MACD moving average to 5, the slow one to 13, and the MACD signal line to 1.

You may not need the MACD horizontal lines as specified in the introduction because we won’t use them in this guide.

Once the setting up of the price chart is done, scanning of trading signals begins right away. It begins in the next step.

  1. Observe the Five Moving Averages Relative to the Price.

We were done setting up the chart in the previous step.

In this step, the scanning for trading signals begins.

From this step, we expect two outcomes – a potentially bullish signal or a potentially bearish signal.

For a potentially bullish signal, the five moving averages will be spread out nicely and arranged in the order EMA 8, EMA 21, SMA 89, SMA 200, and EMA 365 from above downwards.

In addition, the price must be above EMA 365, SMA 200, and SMA 89.

For a potentially bearish signal, however, the five moving averages will be spread out nicely and arranged in the order EMA 8, EMA 21, SMA 89, SMA 200, and EMA 365 from below upwards.

In addition, the price must be below EMA 365, SMA 200, and SMA 89.

Take note of the phrase ‘spread out nicely’ and also the order in which the moving averages must appear in each potential signal. If you get a good potential bullish or bearish signal, proceed to the next step.

  1. Observe the Moving Average Convergence and Divergence (MACD) Indicator.

From the five moving averages to the MACD indicator. Another component of the 4-Hour MACD Forex strategy, besides the five moving averages, is the MACD indicator.

We must therefore see what MACD says about the price before we proceed.

What the MACD says must be relevant to either the potential bullish or the potential bearish signal obtained in the previous step.

MACD is actually the final confirmation of both the bullish and bearish signals, just before trade entry.

Before proceeding to entry, the following MACD confirmations must happen in either signal:

  • Potential Bullish Signal: MACD histogram must shift from below to above the zero line. It must also tend to retrace downwards or fall, still remaining above the zero line, then rise again.
  • Potential Bearish Signal: MACD histogram must shift from above to below the zero line. It must also tend to retrace upwards or rise, still remaining below the zero line, then fall again.
  1. Enter Buy or Sell Position.

Once MACD confirms a potentially bullish signal as specified in the previous step, enter a buy position. That is immediately MACD histogram retraces downwards but still above zero line and then rises again.

For clarification, here are all conditions which must be met before entering a buy position:

  • The five moving averages must be spread out nicely and arranged in the order EMA 8, EMA 21, SMA 89, SMA 200, and EMA 365 from above downwards.
  • The price must be above EMA 365, SMA 200, and SMA 89.
  • MACD histogram must shift from below to above the zero line.
  • MACD histogram must also tend to retrace downwards or fall, still remaining above the zero line, then rise again.

On the flip side, once MACD confirms a potentially bearish signal as specified in the previous step, enter a sell position.

That is immediately MACD histogram retraces upwards but still below zero line and falls again.

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For clarification as well, here are all conditions which must be met before entering a sell position:

  • The five moving averages must be spread out nicely and arranged in the order EMA 8, EMA 21, SMA 89, SMA 200, and EMA 365 from below upwards.
  • The price must be below EMA 365, SMA 200, and SMA 89.
  • MACD histogram must shift from above to below the zero line.
  • MACD histogram must also tend to retrace upwards or rise, still remaining below the zero line, then fall again.
  1. Adjust Stop Loss and Take Profit.

For the buy position, place your Stop Loss just below the low of the candlestick in line with the MACD entry trigger.

For the sell position, however, place your Stop Loss just above the high of the candlestick in line with the MACD entry trigger.

Some traders may prefer wider Stop Loss levels to avoid stop hunts, therefore trader discretion is advised.

Set Take Profit level equal to at least twice what your Stop Loss risks.

A risk to reward ratio of 1:2 is the least you can take, or even more depending on the trade setup.

Wrapping Up.

Has it already hit you how simple this strategy is? I hope it has because it actually turns out to be a simple Forex trading strategy.

Set up your chart and proceed to trade the 4-Hour MACD Forex Strategy in your Olymp Trade account. 

Happy Trading!


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

Start Trading 

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