The MACD Crossover Strategy Analysis Template creates a chart displaying a trading strategy that goes long when the market begins an uptrend and then sells when the price momentum begins to weaken. The MACD and MACD Signal indicators are used to determine the start of an uptrend, while the Price Low indicator is used to determine weakening price momentum.

The MACD is the difference between a short exponential moving average and a longer exponential moving average. The MACD provides a measure of how short term prices are moving compared to longer term prices. An up trending market is indicated by positive MACD values, while a down trending market is indicated by negative MACD values. The MACD Signal is an exponential smoothing of the MACD. Comparison of the MACD to the MACD signal, provides an even earlier indication of market trend.

The MACD Crossover Trading Strategy enters a long position using a market order when the 12 and 16 bar MACD crosses over its 10 bar MACD signal. The trading strategy exits a long position with a trailing stop. Each bar, a new ‘trailing’ sell stop order is generated with a stop price set to the lowest price over the last 3 bars. When the price goes below the ‘trailing’ stop price, the long position is sold.

The trading strategy is setup initially with the following parameters:

Long Entry ‘ ExpAvg Crossover Above(MACD(Close,12,16),1,10)

Long Trailing Stop ‘ PriceLow (Low, 3)

When a new chart based on the template is created, NeuroShell Trader asks if you want to backtest the trading strategy. If you answer yes, the MACD parameters, the MACD signal parameters and the number of bars for the low price trailing stop will be optimized for each chart page in your chart.