MACD Trend Candles

Based on the MACD trading strategy, the MACD Trend Candles Forex indicator for Metatrader 4 draws buy and sell candlesticks on the chart. The indicator appears as green and red candlesticks in the trading platform’s main chart window. It also gives an overall picture of the present trend over several time frames.

What is the MACD Trend Candles?

MACD Candles V3 Indicator is a forex trend trading indicator. This indicator is a technical tool used by traders who enjoy trend-following techniques and are seeking additional confirmation tools for their trades. The MACD Candles V3 indicator is linked to the candlestick bars. The indication is represented by the green and red bars in the main chart. Color variations can be seen: dark red, normal red, dark green, and normal green. Light green candles suggest a strong bullish trend, whereas light red candles indicate a strong bearish trend.

Setting up the MACD Trend Candles
Setting up the MACD Trend Candles

MACD Trend Candles Strategy

The MACD Trend Candles Strategy is a technical system which gives its trading signals on the candlesticks of whatever chart the indicator is installed upon. The first green candlestick indicates a possible BUY time. The first red candlestick indicates a possible SELL time.  When the candlestick changes color, the trader may exit and reverse the open position. The indicator can be used on all assets (Forex, CFD stocks, Indices, Cryptocurrencies, Commodities, etc.) When trading with the MACD Trend Candles indicator, the traders could use their preferred trade entry, stop loss, and take profit technique.

Buy Signal

The following could be your checklist for a buy trade:

  • When the asset being traded is in an uptrend.
  • When the indicator is light green in color.

Once this event occurs:

  • You could open a buy position after the indicator’s color turns light green and you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when the indicator turns red in color.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
MACD Trend Candles Buy Setup
MACD Trend Candles Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the asset being traded is in a downtrend.
  • When the indicator is red in color.

Once this event occurs:

  • You could open a sell position after the indicator’s color turns red and you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when the indicator turns light green in color.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
MACD Trend Candles Sell Setup
MACD Trend Candles Sell Setup

MACD Trend Candles Pros & Cons

Pros

  • The MACD Trend Candles Indicator gives the traders an idea on what the prevailing trend is so that they could pick their trades accordingly.
  • MACD Trend Candles can be used with any forex trading system or strategy to confirm trading entries or exits.

Cons

  • The MACD Trend Candles Indicator may require additional knowledge of price action to be able to utilize the indicator properly.
  • There could be false signals generated and the color change may sometimes be a mere trend correction rather than a trend reversal.

Conclusion

The MACD Trend Candles Indicator is a trend-following indicator which modifies the visible color of the candlesticks as it gives signals. As with any indicator, you may want to trade in accordance with the broader trend and practice on a demo account initially until you completely understand it.