BB MACD TRADING SYSTEM

BB MACD Trading System is a trend and volatility based trading system which is designed to take advantage of uptrend where the price tends to make new highs or downtrends where the price tends to make new lows. This system is based on Moving Average convergence and divergence which is a trend and momentum based indicator and Bollinger bands which is volatility based indicator. Let’s try to understand the working of BB MACD trading system.

BB MACD Overview

BB MACD

MACD line is calculated by reducing the long term moving average of price data from the short term moving average.
When the MACD line is above zero it means short term moving average is above the long-term moving average, which is an indication of an uptrend.  When the MACD line is below zero then it means short term moving average is below the long term moving average which is an indication of the downtrend in markets.
Also, the slope of the MACD line is a very important momentum indicator.BB MACD indicator plots green Dots when the slope of the MACD line is up and purple dots when the slope of MACD line is down.

BB MACD Anatomy

BB MACD Anatomy

Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. But in this indicator, envelopes are plotted on the MACD line instead of the Moving average. Bollinger bands help to determine the volatility of the market. When both bands come together with the mid-MACD line, it’s called the squeeze. A squeeze is a signal of low volatility in the market and when the MACD line gives a breakout from the Bollinger bands it should be considered by traders to be a potential sign of future increased volatility and possible trading opportunities.

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BB MACD : Buy Conditions

BB MACD Buy
  • MACD line should move above the zero level
  • Color of MACD line should be green which is signal of up sloping line.
  • MACD line should give breakout from upper band after a BB Squeeze.
  • Traders can hold the trades till the time color of MACD line is green.

BB MACD : Sell conditions

BB MACD Sell
  • MACD line should move below the zero level
  • Color of MACD line should be purple which is signal of down sloping line.
  • MACD line should give breakout from lower band after a BB Squeeze.
  • Traders can hold the trades till the time color of MACD line is purple.

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I have been actively trading stocks and currencies since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund which has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.

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