Technical verification of the combination settings of MACD and EMA

Hello!

Satari here, researching FX.


Today, I conducted a technical validation of a moving average combination and settings that yielded a rising MACD in the right shoulder test.

This is the USD/JPY on the 1-hour chart.




The validation was performed with the tool “Automated trading tool & trade rule creation support tool MACDMA breakout boy EA.”
http://fxmt4indicator.abproducts.biz/wp/?page_id=543


The results of the validation can be reflected by setting it to the “Trend-following breakout MACDMA breakout boy” indicator.
http://fxmt4indicator.abproducts.biz/wp/?page_id=515


This is a backtest result using MACD and MACDSignal cross for trading.


In the MACDMA breakout boy EA, by default it uses TrendMA50, determines trend by the slope of EMA50, and has a filter that buys when CrossMA20 and MACD cross MACDSignal and EMA20 is above EMA20.

Moreover, for buying, the slope of EMA20 must be upward, EMA20 > EMA50, and the deviation between EMA20 and EMA50 must be between -50 pips and +50 pips as a filter.


As a result of optimization over about two and a half years, the MACD parameter has been changed from the usual (12,26,9) to (12,26,11).


With about two and a half years of data, the equity curve is almost upward-sloping as shown below.




MT4 report is as follows.



The test results overview are as follows.


2015 January ~ 2017 June

Lot 0.01 (1000 units)

Net profit 18776 JPY

Profit factor 1.35

Number of trades 428

Maximum drawdown 2679 JPY

Wins 229, Losses 199 (Win rate 53.5%)

Take profit 80 pips

Stop loss 30 pips

If there is a take width of 20 pips or more, raise the stop by 5 pips in a long position

On the U.S. Non-Farm Payroll release days, close positions at 8 PM and resume at 0 AM


This time, we tested buying/selling based on the MACD and MACDSignal cross, but the good thing about MACD is that there are several trading signals such as MACD slope, MACD crossing the 0 line, MACDSignal crossing the 0 line, etc., and one can flexibly use them as needed.


The test results are just statistical data, but when creating rules that guide trading, at minimum historical backtest data should show a mostly upward trend, and it is ideal to have several rules to use as needed.


Based on the test results, applying discretionary trading, selecting signals with an EA, extending take profits, or tightening stops can further improve performance.


By the way, the settings changed from default during this test are the red parts in the figure below (SignalSMA period, TP, SL—the three items).


The parameters with checkmarks in the figure above are the ones that were varied during testing.

For example, for SL, it means testing in steps of 5 pips from 25 pips to 80 pips.


For example, on a 5-minute or 15-minute chart, you could fix TP at 25 pips, test SL with a range from 25 to 60 pips in 5-pip steps, and see if you can find a more discretionary trading rule.




From the May 31 article on the “Dow Theory Applied Filter,” I have made downloadable free GIF images and MT4 test reports used on the blog available for free download as much as possible.

This time’s images are also included.


Free downloads of blog images, MT4 reports, etc.
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