Many advanced foreign exchange market traders consider the Stair Step
MACD Strategy as one of the most profitable trading strategies. Since it is a
powerhouse combination of two technical indicators, it can minimize the
probability of a loss or completely protect you against one. For an
experienced trader, it can be simple. However, if you are quite new, review
it and take the advice of experts. Otherwise, participating in a winning trade
may be impossible.
Components in Action
As mentioned, the Stair Step MACD Strategy is composed of two very
important technical indicators: the Stair Step Pattern and the MACD Line. It
follows that once the MACD Line reaches the signal line [i.e. it crosses the
EMA (Estimated Moving Average)], a long signal is triggered. Conversely, if
the MACD Line fails to reach the signal line, a short signal is triggered.
The components:
(1) The Stair Step Pattern – it is the chief component of the trading
strategy. It is formed when the chart, after a period of reaching a
high, goes down until it reaches a low. Then, it accelerates back
and crosses a point that is at least a level above the previous high,
and finally plummets to a low point that is equal to the previous
high.
(2) MACD Line – also known as Moving Average Convergence
Divergence Line, it is a popular momentum indicator. In this
particular trading strategy, it is used as the trigger that alerts a
trader regarding the best time to enter a trade.
Tools of the Trade
Since the idea is to enter long and anticipate the MACD Line’s crossover,
using the Stair Step MACD Strategy requires a support level and a
controllable price. As it goes, a swing low should be formed in an uptrend
above or below a swing high. Additionally, it should set a manageable price
for a swing low.
A Surefire Technique
“When using the Stair Step MACD Strategy, the technique is to have a keen
eye in spotting both the Stair Step Pattern and MACD Line, Like most trading
strategies, it works alongside right market conditions” stated by an analyst
from Admiralmarkets.ae – an Arabic Forex broker. The success probability
can be increased by trading whenever you can initiate a trading setup and
whenever you see a big trend. And, as pro traders recommend, it is not best
to use during major economic announcements, as well as during holidays.