MACD Zero Line Cross

Entry Logic

• Exact Entry Trigger: Enter long when the MACD line crosses above the zero line. Enter short when the MACD line crosses below the zero line.
• Confirmation: The MACD histogram must also be on the same side of the zero line.
• Timeframe: 60-minute, Daily.
• Market Condition: Start of a new trend.

Exit Logic

• Profit Targets: Hold until the MACD line crosses back over the zero line.

Stop Loss Structure

• Hard Stop: Place stop 2 ATR below the entry price.

Risk Management Framework

• Risk Per Trade: 1.5% of account capital.
• R:R Requirement: Let profits run.

Position Sizing Model

• Sizing Approach: Volatility-based sizing.

Trade Filtering

• Market Conditions to Avoid: Ranging markets.

Context Framework

• Trend Direction: The zero line cross defines the trend direction.

Trade Management Rules

• Add Size: Add to the position on pullbacks as long as the MACD line remains on the correct side of zero.

Time Rules

• Session Notes: This is a swing trading strategy.

Setup Classification

• A+ Setup: The zero line cross is accompanied by a breakout from a long-term consolidation pattern.

Market Selection Criteria

• Instruments: Stocks with a history of trending well.

Statistical Edge Metrics

• Win Rate: 35-45%.
• Profit Factor: 2.5.
• Expectancy: 0.7R.

Failure Conditions

• Strategy Fails: In choppy markets with frequent zero line crosses.

Psychological Rules

• Discipline: Hold winning trades to capture large moves.

Advanced Components

• MTF Alignment: The weekly chart should support the new trend direction.

Location

• Strongest: At the beginning of a new multi-week or multi-month trend.