MACD Entries with Stop-Based Position Sizing and R-Multiple Targets

Summary

This long-only strategy enters after a recent MACD crossover above its signal line, provided both lines remain below zero and price is above a weighted moving average. The entry signal must have occurred within the previous five bars, and the strategy permits only one open trade. It sets the stop at the lowest low of the prior three bars and places the profit target at a configurable multiple of the entry-to-stop distance. Position size is calculated from account equity, a per-trade risk fraction, and the stop distance.

The document describes a nominal risk setting of 1% per trade and a default target of four times the risk distance, alongside BTC/USDT futures test settings covering roughly one year. It gives no backtest performance statistics, so its claims about controlling drawdowns or delivering stable returns are not substantiated. The approach is long-only, and MACD lag, stop and target placement, and trading costs are noted concerns. Actual losses can also exceed the planned amount if execution gaps past the stop or contract sizing and costs differ from assumptions.

Key ideas

• A recent bullish MACD crossover qualifies only when both MACD lines are below zero and price is above the WMA filter.
• The stop uses the prior three-bar low, and the target is set as a multiple of the stop distance.
• Position size scales with account equity, the chosen risk fraction, and the distance to the stop.
• The published defaults specify 1% capital risk per trade and a four-R profit target.
• The document provides test settings but no performance statistics and identifies MACD lag and execution costs as limitations.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.