MACD Strategy + 200 MA Trading Strategy

Category: Trading Strategies | Quantina Intelligence Ltd.

1. Overview: MACD Indicator Basics

The MACD (Moving Average Convergence Divergence) is one of the most popular tools in technical analysis. It identifies changes in the strength, direction, momentum, and duration of a trend.

Key Components:

• MACD Line = 12 EMA – 26 EMA
• Signal Line = 9 EMA of the MACD Line
• Histogram = MACD Line – Signal Line

Basic Entry Rules:

• Buy Signal: When the MACD line crosses above the signal line
• Sell Signal: When the MACD line crosses below the signal line

2. Trend Confirmation Using the 200 Moving Average

To improve the quality of MACD signals, we use the 200-period Moving Average (MA) as a trend filter.

Trade Only in the Direction of the Trend:

• Buy only when price is above the 200 MA
• Sell only when price is below the 200 MA

This filter helps eliminate false signals during sideways markets.

✅ 3. Entry Rules Summary

4. Extra Trick: Use a Trailing Stop to Hedge Profits

While your entry point is crystal clear (MACD crossover confirmed by MA200 trend), how you exit can drastically affect your profit outcome.

➕ Advanced Tip: Trailing Stop = Dynamic Profit Hedging

Using a Trailing Stop allows your trade to remain open as long as the market moves in your favor — and closes only when the trend reverses.

Benefits:

• Locks in profits while giving room for trend continuation
• Turns this setup into a hedge-style profit strategy
• Helps avoid premature exits while protecting against reversals

Example:
After a long entry, set a trailing stop of 30–50 pips (or based on ATR). The stop will adjust upward with price — locking in gains while letting the trade run.

5. Sample Python Code

import pandas as pd

data['EMA12'] = data['close'].ewm(span=12).mean()
data['EMA26'] = data['close'].ewm(span=26).mean()
data['MACD'] = data['EMA12'] - data['EMA26']
data['Signal'] = data['MACD'].ewm(span=9).mean()
data['MA200'] = data['close'].rolling(200).mean()

# Define Long Entry Conditions
data['Position'] = 0
cond_long = (
    (data['close'] > data['MA200']) &
    (data['MACD'].shift(1) < data['Signal'].shift(1)) &
    (data['MACD'] > data['Signal'])
)
data.loc[cond_long, 'Position'] = 1

Final Thoughts

This combined strategy merges MACD momentum with the MA200 trend filter, giving you high-probability trades aligned with major market direction.

Best for:

• H1 or H4 timeframes
• Major forex pairs or trending stocks
• Low-news or technical-trend environments

Refine and backtest before applying to real accounts.

Want more strategies like RSI + MACD or Bollinger breakout filters? Contact Quantina today.