A Simple Mechanical Trading System for a Positional Trader
Many traders have asked me how to design a simple trading system to trade mechanically Nifty Futures or Stock Futures. Though I am following a different type of wave analysis and I am not following any mechanical trading system, I have found this particular system useful for positional trading.
Moving Average Convergence and Divergence (MACD) signals generated in intraday one hour charts are catching almost all the market turns. The parameters are 26 EMA and 12 EMA and a 9 EMA signal line. The buy or sell signal generated by this MACD is giving more number of profitable trades than any other mechanical system.
Unlike momentum indicators like ROC or RSI or Stochastics, which is based on momentum of the Market, MACD is based on Exponential Moving Average Cross over of the fast one over the slower one. So this signal generation is based on the price movement itself.
The advantage of this system is you no need do complex analysis on the movement of the scrip to predict the future course of the market. Buy and sell signal will be generated automatically using this formula. It will be useful in trending or stagnant Market.
The main disadvantage of this system is, it doesn’t predict the direction of the market. This system will not let you aware of any big moves that are waiting to take place. Some times you may get trapped in the wild swings of the market. But this type of wild swings will not happen very often in the market.
Just do apply on intraday one our charts.
Many traders have asked me how to design a simple trading system to trade mechanically Nifty Futures or Stock Futures. Though I am following a different type of wave analysis and I am not following any mechanical trading system, I have found this particular system useful for positional trading.
Moving Average Convergence and Divergence (MACD) signals generated in intraday one hour charts are catching almost all the market turns. The parameters are 26 EMA and 12 EMA and a 9 EMA signal line. The buy or sell signal generated by this MACD is giving more number of profitable trades than any other mechanical system.
Unlike momentum indicators like ROC or RSI or Stochastics, which is based on momentum of the Market, MACD is based on Exponential Moving Average Cross over of the fast one over the slower one. So this signal generation is based on the price movement itself.
The advantage of this system is you no need do complex analysis on the movement of the scrip to predict the future course of the market. Buy and sell signal will be generated automatically using this formula. It will be useful in trending or stagnant Market.
The main disadvantage of this system is, it doesn’t predict the direction of the market. This system will not let you aware of any big moves that are waiting to take place. Some times you may get trapped in the wild swings of the market. But this type of wild swings will not happen very often in the market.
Just do apply on intraday one our charts.
