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MACD

This is a MACD indicator based trading strategy. A buy signal occurs when the MACD line crosses above the signal line, while a sell signal..
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Written by Quadency Customer Service. Updated over a week ago

Latest update - January 2023:

  • The Cooldown period feature is now available. This setting gives the bot the ability to specify the number of candle events that would be skipped after closing a position.

  • You can now trade with bots at no fees using QUADX as an exchange.

Overview

This is a MACD indicator-based trading strategy. A buy signal occurs when the MACD line crosses above the signal line, a sell signal occurs when either the profit target or stop-loss levels have been reached or when the MACD line crosses below the signal line.

Details

The Moving Average Convergence Divergence (MACD) is a momentum indicator. It is calculated by Traders to find buy entries and sell exits. The original formula for it is MACD=12-Period EMA − 26-Period EMA.

However, in Quadency you can manually configure the different periods used to calculate it. The MACD indicator is plotted alongside a signal line which helps traders to define entries and exits. You can also check our article on the MACD strategy.

How to configure the MACD bot

General Settings:

  • Exchange: The exchange to run this bot on.

  • Market: The pair (symbol) to trade. Quadency's standard convention is Base/Quote. For example, in BTC/USD, BTC is the base currency and USD is the quote.

  • Starting Capital: The maximum amount of Quote currency available to the bot for trading. When backtesting, this value can be any amount. However, in live trading mode, the bot will stop trading if funds available in the Quote currency wallet become insufficient. Click here to view the minimum order size guide.

Strategy Settings:

  • MACD Fast Period, also called short-term moving average, here you need to specify the number of candles to look back to calculate the MACD Fast EMA.

  • MACD Slow Period, also called long-term moving average, here you have to specify the look-back period (number of bars) for slow the EMA calculation.

  • MACD Signal Period: It is usually a nine-period EMA of the MACD but you can configure it within the parameters.

  • Exit Condition: Price percentage change or indicator confirmation

  • Cooldown period: This setting gives the bot the ability to specify the number of candle events that would be skipped after closing a position.

Note: it is usually recommended for the slow period EMA to have a lower value than the fast period EMA.

Strategy Description

  • Buy Condition: MACD line is above the signal line - buy using 100% of available capital

  • Sell Condition: Profit Target or Stop-Loss (option 1), or Indicator Confirmation (option 2)

  1. Close the position when Profit Target or Stop Loss is reached.

  2. The position should only be closed when MACD crosses below the signal line (stop-loss and profit target will be ignored).

Order Types

  • This strategy sends all orders as Market orders. It is advisable to trade pairs with sufficient liquidity to avoid slippage. Thinly traded markets can result in worse than ideal fills, causing the profits to be smaller than expected.

Tips:

  • Shorter candle intervals result in more frequent trades than longer ones

  • A tighter profit target and wider stop-loss will result in smaller but frequent profits

  • The bot evaluates the position at the end of each candle interval, it is possible for the bot to not place any order if the conditions are met within the candle timeframe but not at the end.

  • Be sure to back-test your settings before starting live to make sure the strategy performs well on the market and the timeframe selected

  • Any profits from trades are automatically reinvested in subsequent trades. For example, if you start the bot with $100, and the first trade results in a $2 profit, the next trade will use $102, and so on.

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