New Version of MACD Indicator - Impulse MACD

Jul 21, 2024

Lecture: New Version of MACD Indicator - Impulse MACD

Introduction

  • MACD Indicator: One of the oldest and most famous indicators, commonly used by beginners.
  • New Version: Impulse MACD, claimed to be three times more profitable.

Classic MACD

  • Mechanics: Identifies trends via crossovers between two lines.
    • Blue Line crosses above Orange Line: Potential uptrend (buying opportunity).
    • Blue Line crosses below Orange Line: Potential downtrend (selling opportunity).
  • Problem: Effectiveness decreases in non-trending (sideways) markets.
    • False Signals: Can lead to losses over time.

Impulse MACD

  • Functionality: Similar to classic MACD but with advanced features.
  • Key Feature: Filters out false signals in ranging markets by going flat.

Applying Impulse MACD

  • Platform: TradingView.com
  • Steps:
    1. Go to the indicator section and search "Impulse MACD" by LazyBear.
    2. Apply the indicator and adjust settings for a simpler view (Settings > Style).
  • Components:
    • Impulse MACD Line (Blue Line)
    • Signal Line (Orange Line)
    • Histogram
    • Middle Line

Using Impulse MACD

  • Trend Identification: Crossovers between Impulse MACD Line and Signal Line.
    • Impulse MACD crosses above Signal Line: Uptrend.
    • Impulse MACD crosses below Signal Line: Downtrend.
    • Lines go flat: Market is ranging; avoid positions.

Advanced Strategy: Impulse MACD Extension

  • Objective: Higher win rate.
  • Steps:
    1. Add overbought and oversold levels.
      • Use Alt+H or manual lines above/below middle line.
    2. Identify overbought/oversold lines by separating major and minor crossovers.
    3. Only consider crossovers outside these levels for positions.
  • Trading Strategy:
    • Buy Signal: Upward crossover below oversold line.
    • Sell Signal: Downward crossover above overbought line.
    • Risk Management: Stop loss below nearest swing low; profit target at 1.5x stop loss.

Example 1: Valid Buy Position

  • Setup: Upward crossover below oversold line.
  • Risk Management:
    • Stop loss: Below nearest swing low.
    • Profit target: 1.5x stop loss.
  • Result: Profitable trade.

Example 2: Valid Sell Position

  • Setup: Downward crossover above overbought line.
  • Risk Management:
    • Stop loss: Nearest support level.
    • Profit target: 1.5x stop loss.
  • Result: Profitable trade.

Advanced Strategy: Hunting Breakouts

  • Definition: Significant move in one direction after a long period of ranging.
  • Using Impulse MACD: Identifies ranging markets and potential breakouts.
  • Steps:
    1. Identify ranging market (flat impulse MACD).
    2. Predict breakout direction using the histogram.
    3. Enter position based on direction (e.g., bullish/bearish momentum).
    4. Risk Management: Stop loss just below entry, profit target 3:1 risk ratio.
  • Example:
    • Setup: Histogram starts rising, indicating bullish momentum.
    • Risk Management: Stop loss just below entry, profit target 3:1 ratio.
    • Result: Profitable trade.

Conclusion

  • Takeaway: Impulse MACD provides multiple strategies with higher profitability and minimized risk due to its unique features.
  • Call to Action: Like the video, subscribe, and check out additional content.

Resources

  • Platform: TradingView.com
  • Indicator: Search "Impulse MACD" by LazyBear

Full transcript