MACD Histogram Reversal

Entry Logic

• Exact Entry Trigger: Enter long when the MACD histogram ticks up from below the zero line. Enter short when the histogram ticks down from above the zero line.
• Confirmation: A candle closing in the direction of the trade.
• Timeframe: 5-minute, 15-minute.
• Location: Near a support or resistance level.
• Market Condition: Trending or ranging.

Exit Logic

• Profit Targets: Target the next support/resistance level.
• Trailing Stop: Trail the stop behind the prior swing low/high.

Stop Loss Structure

• Hard Stop: Place stop 1 ATR below the entry candle low.

Risk Management Framework

• Risk Per Trade: 0.75% of account capital.
• R:R Requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.

Trade Filtering

• Market Conditions to Avoid: Low volatility.

Context Framework

• VWAP Relationship: Longs are stronger above VWAP.

Trade Management Rules

• Breakeven: Move stop to breakeven after price moves 1R in profit.

Time Rules

• Optimal Window: Any time during the main session.

Setup Classification

• A+ Setup: Entry occurs with a MACD divergence.

Market Selection Criteria

• Instruments: Any liquid instrument.

Statistical Edge Metrics

• Win Rate: 50-60%.
• Profit Factor: 1.5.
• Expectancy: 0.25R.

Failure Conditions

• Strategy Fails: In choppy, directionless markets.

Psychological Rules

• Discipline: Avoid taking every signal; focus on high-quality setups.

Advanced Components

• Filters: Add a 200-period EMA filter; only take longs above and shorts below.

Location

• Strongest: At the start of a new trend.