Macd

Quote from tradersaavy:

You know those divergences that keep going for a while creating more divergences before finally reversing? Waiting for the zero line cross or a trend line break of some sort can help on these occasions.
More...

Yeah, zero line crosses can help keep you out of those strong trends.

Or, you could try something like this.

  • Wait till you see a completed pattern. In other words, price has made a lower low or higher high, and MACD has made higher low or lower high. In other words, a clear unquestionable pattern.
  • Then, wait for a 4 or 5 tick retracement for entry. On this chart I waited for a 5 tick retrace.
  • The green dashes are the long entries, and the red are the short entries.
  • The first signal went up about 7 ticks, then came back down.
  • The second signal continued up.
  • The third signal went down about 8 ticks, then went back up.
  • The fourth signal continued down pretty good.
  • The fifth signal went up pretty good, then came back.
  • The sixth signal went down about 5, then came back up.

Chart2.jpg
 
Nwbprop.....


Your question... I was wondering if you could elaborate a little more on the use of these 2 combined indicators. I have been using the 5,3,2 stoch in combo with the 5,13,6 macd and never could put it all together.

Are their significant levels for the 5,5,2 stoch like neutral is for the macd? Maybe the 50, 80, and 20.

I totally understand if you think you are divulging to much by answering these questions. Thanks.

A. - Here is a good link to get everyone on the same sheet of music as to what or how the Stochastic can help us in trading........

http://stockcharts.com/education/IndicatorAnalysis/indic_stochasticOscillator.html

Now what I do with the Stochastic is to disregard the %K line (I color it as the same color as my screen background so I do not see it) and focus on the %D line as a single line indicator. If the Stoch is near the 20 line or the 80 line then as you have read this means different things.....so if the Stoch is up around 85 and rolling over, as my MACD is getting an upward "zero" line cross, then I have a piece of the probability puzzle that does not fit very good (I would like to see the Stoch rising up from the 20 to 50 area in this instance to be synchronized with the rising MACD). Using both indicators together helps a trader to get into trades that are presenting a "higher probability" scenario.....because there is never a perfect scenario for entry. As I have stated before, the Stoch only makes up about 25% of my decision to enter a trade from.....the MACD is the main deciding factor and then volume flow. So the Stoch is there for me to reference, but I do not give it more then 25% weighting in my decision making process. In the end, the 20 and 80 area values for the Stoch are the key areas to pay attention to when you reference this indicator (20 area is considered oversold and the 80 area is considered overbought).


Wanderer.... Never a problem...thanks.
 
Quote from tradersaavy:

Chartist,

I see what you're doing. It is similair to my style.

What do use do guide you to take profits ?
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I don't really have set rules for profit taking. I know a lot of traders will tell you to try for a 2:1, or 3:1 reward risk ratio, but I've never really been able to do that. Really, it depends a lot on how I'm feeling that day. But, in honesty, I probably get out of my positions way too early most of the time.

But, my risk is pretty much the same each trade. I don't risk more than 1 percent. So, if I had a $50,000 account, I'm not gonna risk more than $500 on the trade.

And since I like to put my initial stop 1 tick below the last low (for a long), where I get my setup determines how many contracts I'll purchase.

For example, on setup #2, I'd have about 6 ticks risk on that trade. That's about $75 risk a contract, so I wouldn't buy more than 6 contracts (6x$75=$450+comm).

But, as far as how I took my profits on the way up...I probably get out way too soon most of the time, but I'm working on it.
 
Today with the 4,13,1 on the 5 min has worked very well.....


We had a decent "Zero Line" cross SHORT entry at the end of the 08:10 - 08:15 (CST) candle with a fill @ 1196.50.....this should have hit a few points for you after the initial targets.

At the 09:20 - 09:25 (CST) candle you could have taken a "1/2 MACD Valley Value" LONG trade from around 1195.25....or if you waited, a "Zero Line" cross LONG should have been at the 09:30 - 09:35 (CST) candle with a fill around 1196.50. Any one of these two entries would have turned out to be very profitable for you.
 
i am very interested in this style of trading and I have been keeping a close eye on this thread. My question is, if u are using a 28 period average for one of your lines, does this mean u need to wait for 28 bars or periods before the indicators work properly? thx in advance. jim
 
From earlier today....I did not have time to do charts then.


AMT4SWA


Registered: Apr 2002
Posts: 1039


02-11-05 12:30 PM

Today with the 4,13,1 on the 5 min has worked very well.....


We had a decent "Zero Line" cross SHORT entry at the end of the 08:10 - 08:15 (CST) candle with a fill @ 1196.50.....this should have hit a few points for you after the initial targets.

At the 09:20 - 09:25 (CST) candle you could have taken a "1/2 MACD Valley Value" LONG trade from around 1195.25....or if you waited, a "Zero Line" cross LONG should have been at the 09:30 - 09:35 (CST) candle with a fill around 1196.50. Any one of these two entries would have turned out to be very profitable for you.


Here are the charts for today in the morning..........


http://www.ttrader.com/mycharts/display.php?p=31077&u=cktrades&a=CK Trades&id=1303

Entry of the SHORT at the "red arrow" as described above and then both choices for the LONG entry at the "blue arrows".......

http://www.ttrader.com/mycharts/display.php?p=31078&u=cktrades&a=CK Trades&id=1303

Have A Great Night All!
 
Quote from jim c:

i am very interested in this style of trading and I have been keeping a close eye on this thread. My question is, if u are using a 28 period average for one of your lines, does this mean u need to wait for 28 bars or periods before the indicators work properly? thx in advance. jim
More...

yes, the indicator will calculate the last 28 bars. If you choose a setting of 35, then it calculates the last 35 bars. You tell it how many periods to calculate. Depending on the indicator, it has its own unique way of calculating that information. hope that helped

Andy
 
Quote from AMT4SWA:

From earlier today....I did not have time to do charts then.


AMT4SWA


Registered: Apr 2002
Posts: 1039


02-11-05 12:30 PM

Today with the 4,13,1 on the 5 min has worked very well.....


We had a decent "Zero Line" cross SHORT entry at the end of the 08:10 - 08:15 (CST) candle with a fill @ 1196.50.....this should have hit a few points for you after the initial targets.

At the 09:20 - 09:25 (CST) candle you could have taken a "1/2 MACD Valley Value" LONG trade from around 1195.25....or if you waited, a "Zero Line" cross LONG should have been at the 09:30 - 09:35 (CST) candle with a fill around 1196.50. Any one of these two entries would have turned out to be very profitable for you.


Here are the charts for today in the morning..........


http://www.ttrader.com/mycharts/display.php?p=31077&u=cktrades&a=CK Trades&id=1303

Entry of the SHORT at the "red arrow" as described above and then both choices for the LONG entry at the "blue arrows".......

http://www.ttrader.com/mycharts/display.php?p=31078&u=cktrades&a=CK Trades&id=1303

Have A Great Night All!
More...

AMT,

Thanks for the great charts. I hope you keep posting them and had a few questions.

I think that this type of trading is good for 2 types of market conditions; congestion and catching the change in trend early.

I would think the first part before taking "1/2 macd valley trade" is determining the market condition. Do you use the macd, stoch, and volume on the higher fractal to determine the market condition?

It seems like their are 2 really important parts for the 1/2 macd valley entry.

1. the time between the trade too the zero line.

2. the time from the xross of the zero line to the divergence onto the other side.

With part 1, it seems that you are looking too see if the current trend(side of the 0 axis) is being eliminated by looking for a xross throught he 0 line.


It seems like the 2 options are:
- the macd could not make it to the zero line before resuming toward the trend.

-the macd could converge to 0.

Do you focus on volume, price action, stoch 552, and macd to determine if price will make it to the zero line?

For part 2, where the macd makes it to 0, it seems like their are 3 options that could occur.

-diverge through 0 and far enough away that you are in trending modus.

-hit 0 and continue towards the direction of the old trend(no xross of the 0 line).

-xross 0 but with not enough umph and go into congestion.

This could all be wrong but I was just trying to logically walk through the steps.


Thanks.

jc
 
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