Therefore this strategy goes long if the histogram goes above zero and the indicator detects a oversold condition (value below 29). If the inverse logic is true, the strategy goes short ( overbought condition with a value above 71 and the histogram falling below the zero line value).
Please be aware that this pure double strategy using simply two classic indicators does not have any stop loss or take profit money management logic.
All trading involves high risk; past performance is not necessarily indicative of future results. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact , if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.
//@version=2 strategy("MACD + Stochastic, Double Strategy (by ChartArt)", shorttitle="CA_-_MACD_Stoch_Strat", overlay=true) // ChartArt's MACD + Stochastic Strategy // // Version 1.0 // Idea by ChartArt on February 24, 2016. // // This strategy combines the classic stochastic // strategy to buy when the stochastic is oversold // with a classic MACD strategy to buy when the // MACD histogram value goes above the zero line. // // Only difference to the classic stochastic is a // default setting of 71 for overbought // (classic setting 80) and 29 for oversold // (classic setting 20). // // This strategy goes long if the MACD histogram // goes above zero and the stochastic indicator // detects a oversold condition (value below 29). // If the inverse logic is true, the strategy // goes short (oversold condition value above 71). // // This pure double strategy does not have any // stop loss or take profit money management logic. // // List of my work: // https://www.tradingview.com/u/ChartArt/ // // __ __ ___ __ ___ // / ` |__| /\ |__) | /\ |__) | // \__, | | /~~\ | \ | /~~\ | \ | // // // Input fastMAlen = input(12, minval=1, title="MACD fast moving average") slowMAlen = input(26,minval=1, title="MACD slow moving average") signalMACDlen = input(9,minval=1, title="MACD signal line moving average") StochLength = input(14, minval=1, title="Stochastic Length") OverBoughtOverSold = input(71, title="Overbought Level (Oversold = 100 - Overbought") switch=input(true, title="Enable MACD Bar Color?") // MACD Calculation MACD = ema(close, fastMAlen) - ema(close, slowMAlen) signalMACD = ema(MACD, signalMACDlen) delta = MACD - signalMACD fastMA = ema(close,fastMAlen) slowMA = ema(close,slowMAlen) veryslowMA = sma(close, 100) // Stochastic Calculation OverBought = OverBoughtOverSold OverSold = 100-OverBought smoothK = input(3, title="Smoothing of Stochastic %K ") smoothD = input(2, title="Moving Average of Stochastic %K") k = sma(stoch(close, high, low, StochLength), smoothK) d = sma(k, smoothD) // Colors bartrendcolor = close > fastMA and close > slowMA and close > veryslowMA and change(slowMA) > 0 ? green : close < fastMA and close < slowMA and close < veryslowMA and change(slowMA) < 0 ? red : blue barcolor(switch?bartrendcolor:na) // Strategy if (not na(k) and not na(d)) if (crossover(k,d) and k < OverSold and crossover(delta, 0)) strategy.entry("Stoch_L__MACD_L", strategy.long, comment="Stoch_L_+_MACD_L") if (crossunder(k,d) and k > OverBought and crossunder(delta, 0)) strategy.entry("Stoch_S__MACD_S", strategy.short, comment="Stoch_S_+_MACD_S") //plot(strategy.equity, title="equity", color=red, linewidth=2, style=areabr)