LS:
1) The Williams %R is redundant some times.
MACD fast line goes below slow usually at the same time that %R goes below -50%.
%R is observed for exit if it goes ahead first, trying to keep larger profits.
%R is more volatile since reflects closings in relation with the highest high/low of the las 14 bars.
Closings getting away from extremes is significant. it produces additional whipsaws, but if the move of the security was big and prolonged, why not take profits on pause or weakness? re-entry on the trend takes pennies on commissions for securities and a couple of pips on Forex.
2) "...On the entry side....the entry is taken on a zero line macd fast cross?"
YES, if it was under the zero line. And any time that goes above the slow line WHILE MACD IS AVBOVE ZERO LINE.
The goal is to take the wave of up moves any time MACD fast line is above the slow while MACD itself is above the zero line. It seems insignificant but reassuring. You now know three things:
a) that you are with the trend.
b) that your position is gaining ground, and
c) that you will have a profits more often that not.
Over the years, people ask ...Why not stay long all the time MACD is above zero, and short when it is below zero?
That is a valid point and less stressful way of trading. It is a gentle way perhaps on stocks, but not on Commodities and certainly not on FOREX where we experience brutal moves.
3) "...What are the moving averages used ~ 20 and 50 period?"
a) the fast is a 13 day exponential
b) the slow is a 25 simple moving average.
No significance in particular, but
a) looks good and less monotonous on the chart
b) visually tells you whether the pair is trending up or down, depending which line is above/below.
c) on up/down moves some people re-enter when the closing comes back to the slow average.
4) "...On the stop topic it seems that with the EOD timeframe the final hard stop is your capital in the trade or what ever your losses are until the decision (price action/external, macd or williams) is made to exit.
Yes.
Best!
mF
