Abstract
A lot of strategies for Take Profit and Stop Loss functionalities have been propounded and scrutinized over the years. In this paper, we examine various strategies added to a simple MACD automated trading system and used on selected assets from Forex, Metals, Energy, and Cryptocurrencies categories and afterwards, we compare and contrast their results. We conclude that Take Profit strategies based on faster take profit signals on MACD are not better than a simple MACD strategy and of the different Stop Loss strategies based on ATR, the sliding and variable ATR window has the best results for a period of 12 and a multiplier of 6. For the first time, to the best of our knowledge, we implement a combination of an adaptive MACD Expert Advisor that uses back-tested optimized parameters per asset with price levels defined by the ATR indicator, used to set limits for Stop Loss.
Highlights
When trading on an asset, investors are exposed to a potentially high risk if the price moves towards a direction which is the opposite from the one they had anticipated
With the results of these comparisons, we aim to provide some practical insights into every day traders about which Take Profit and Stop Loss technics to incorporate with an existing MACD strategy and which to avoid
There has not yet been a study of MACD combined with the Take Profit/Stop Loss strategies we examined based on ATR and in a faster timeframe
Summary
When trading on an asset, investors are exposed to a potentially high risk if the price moves towards a direction which is the opposite from the one they had anticipated. This could result in considerable losses in the investment capital, unless immediate action is taken to exit the non-profitable position as soon as possible. We tested and compared six different Take Profit and Stop Loss strategies used in combination with an algorithmic trading system, based on the MACD indicator on eleven different assets over a six-month period. There has not yet been a study of MACD combined with the Take Profit/Stop Loss strategies we examined based on ATR and in a faster timeframe
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