7 Days of Trading Challenge: MACD and Risk Management Challenge

Monday: Launch of the Challenge

Today's mission: Understanding the MACD
Today, we're going to take a look at how the MACD works. This indicator, created by Gerald Appel in the 1970s, is an oscillator based on the difference between two exponential moving averages (EMAs). The MACD is highly appreciated for its trend, momentum and reversal signals.

Tasks to be performed :

• Playback and Video :
  • Read a detailed article on the MACD, including the meaning of its three components: the MACD line, the signal line and the histogram.
  • Listen to our podcast which explains how to use the MACD to identify divergences, crossovers and trend changes.

Recommended resources :

• Article : "Understanding the MACD: From theory to practice

• Podcast: "MACD strategy for winning trading

• Configuring your chart :

  • Add the MACD indicator to your trading platform (MT4, TradingView, etc.), with default settings: 12, 26, 9.
  • Explore how this indicator behaves over different time units (H1, H4, D1).

• Observation:

  • Choose two assets (for example, USD/JPY and the Dow Jones index) and observe the crossings of the MACD line and the signal line, as well as the divergences between MACD and price.

Tuesday to Thursday: Analysis and Strategy

Three-day mission: Develop and test your MACD strategy with risk management

Tuesday: Analysis of MACD signals

Today, we're going to focus on analyzing MACD signals: crossings, divergences and trend confirmations.

Tasks to be performed :

• Locate MACD line crossings above or below the signal line and identify buy or sell signals.
• Analyze divergences between the MACD and prices to spot potential trend reversals.

Wednesday: Integration with other tools

Today, we're going to reinforce our strategy by combining the MACD with other indicators to fine-tune entry and exit points.

Tasks to be performed :

• Combine the MACD with support and resistance levels or other indicators like the RSI to confirm your signals.
• Identify two trading opportunities based on these combined criteria (one bullish and one bearish).

Thursday: Backtesting and optimizing your strategy

It's time to test your MACD trading strategy using historical data.

Tasks to be performed :

• Backtest the recent period using MACD signals to see how your strategy would have performed.
• Apply risk management in your tests, such as fixed stop-loss and take-profit, and check whether your strategy is viable over several time horizons.

Friday: Practice

Today's mission: Execute your trades using MACD and risk management
Today, you'll be implementing your MACD-based trading strategy with strict risk management.

Tasks to be performed :

• Place real trades or demo trades following the MACD signals you've identified.

• Make sure you apply serious risk management: set stop-loss and take-profit levels and monitor your risk/return ratio.

• Trading Journal :

  • Keep a trading diary where you record your decisions, reasons for entry and exit, stop-loss and take-profit levels, as well as the results of each trade.

Saturday: Review and Adjustments

Today's mission: Analyze the results of your trades and adjust your strategy
Today, we're going to analyze your trades and see if any adjustments need to be made in your approach.

Tasks to be performed :

• Review your trades from Friday. Analyze what worked and what can be improved in your decision-making.
• Adjust your trading strategy according to the results obtained, possibly revising your entry and exit criteria or risk management.

Sunday: Taking stock and sharing

Today's mission: Take stock and share your results
The last day of the challenge is an opportunity to review your week in full and share your progress with the community.

Tasks to be performed :

• Summary :

  • Write up a summary of your trading week. Which strategies worked well? What lessons did you learn from using the MACD and risk management?
  • Think about the adjustments you need to make to improve your future trading performance.

• Share :

  • Share your results, progress and thoughts on social networks. Use the hashtag #xenesy and tag @xenesy_project in your posts to encourage the community to share their experiences.
  • Invite other participants to share their results so we can learn together.

Conclusion

The MACD is a powerful indicator for detecting trend changes and divergences, but its real strength lies in its ability to be combined with good risk management. This challenge has enabled you to better understand the use of the MACD and to test strategies in real-life conditions. Don't forget that rigorous risk management is essential to protect your gains and minimize your losses.

Good luck to you all, and see you soon on the markets!