Macd
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Depends on what you want from it. Many people, for example, see divergences in lower highs in the histogram while price is making higher highs, but they don't understand that the histogram represents the difference between the two MACD lines. Therefore, if both lines are rising at approximately the same slope, the histogram will practically disappear, but that's a confirmation, not a divergence.
--Db
good one phoenix, and it's just stuff like that. Everybody is looking for something big. I have never found anything big. Little details, you never know. Maybe you don't even use it, but next time you see what happens when prices rally and macd contracts. It's not that complicated. And you didn't have anything going anyway or you wouldn't have been fishing around.
I don't look for anything big. If price is making higher highs, I stay in. If they aren't, I raise my stop. If they begin making lower highs, I'm out. That's it. Vice-versa for shorts. I don't see why it's necessary to get any more complicated than that.
On the other hand, if one wants to use indicators, then it's important to understand how they work. Which is why I answered the original question.
--Db
THANKS! to both DBPhoenix and Aphexcoil. I have been messing around with the MACD lately and found it to be quite useful.
DBPhoenix, you really cleared up the main thrust of my question with the histogram and divergence.
As far as parameters and the usefulness of the MACD I find the use of proper time frames more important than anything.
DBPhoenix, you really cleared up the main thrust of my question with the histogram and divergence.
As far as parameters and the usefulness of the MACD I find the use of proper time frames more important than anything.
Greetings to the denizens of '02 from the future.
There has been some discussion lately about bar intervals and timeframes and going for the "big turns" and the "big moves" and whether trading price is superior to or equivalent to trading with indicators, particularly the MACD, and whether and how an indicator such as the MACD can aid in automation even for one who is trading price, i.e., a "PA" trader. And I was reminded of this thread in which I participated and saw no reason to start a new one since this one has only 15 posts in it. A quick 'n' dirty thread, if you will.
I provided an explanation of the MACD at the beginning, so I needn't go into that again. As for the now, the subject of oil came up, and since I first posted about the PA in this chart two months ago, it was interesting to see it brought up again today.
I used to be a fan of the MACD before I moved on from it, but if I were going to explore automation (which I won't, but 40D is interested), MACD is what I would use. And while it's not as simple as it might seem, it's not terribly complicated. As I point out earlier in this thread, 13 years ago, it all depends on what one wants. Which is likely the most difficult decision.
If one is going for the "big turns", he must of course use the weekly chart (he can use the daily, but the signals are far muddier). Given that, there are at least three options: enter at the first sign of countermovement in the histogram, at the first uptick in the MACD, or at the cross. I've noted the bars at which each entry would be made. All of these are "too early", as is so often the case, but price does hold and make a double bottom when it tests 44 a second time, and if one doesn't mind the opportunity risk, nothing is lost by entering and holding. This is, of course, hindsight, and price could just as easily have fallen through 44 on its way to who knows where. Still might. The last time this happened, price based for three months, and the three months are just about up.
The second chart shows how this would be traded via PA. But there are choices to be made here as well: assume the opportunity risk and buy when the stride is broken, buy the double bottom, short a failure of the double bottom if and when it occurs, buy the breakout through the top of what has become a range by the time the double bottom is made (this range is more easily seen on the daily). Which choice one makes will depend on what balance one seeks between price risk and information risk.
There has been some discussion lately about bar intervals and timeframes and going for the "big turns" and the "big moves" and whether trading price is superior to or equivalent to trading with indicators, particularly the MACD, and whether and how an indicator such as the MACD can aid in automation even for one who is trading price, i.e., a "PA" trader. And I was reminded of this thread in which I participated and saw no reason to start a new one since this one has only 15 posts in it. A quick 'n' dirty thread, if you will.
I provided an explanation of the MACD at the beginning, so I needn't go into that again. As for the now, the subject of oil came up, and since I first posted about the PA in this chart two months ago, it was interesting to see it brought up again today.
I used to be a fan of the MACD before I moved on from it, but if I were going to explore automation (which I won't, but 40D is interested), MACD is what I would use. And while it's not as simple as it might seem, it's not terribly complicated. As I point out earlier in this thread, 13 years ago, it all depends on what one wants. Which is likely the most difficult decision.
If one is going for the "big turns", he must of course use the weekly chart (he can use the daily, but the signals are far muddier). Given that, there are at least three options: enter at the first sign of countermovement in the histogram, at the first uptick in the MACD, or at the cross. I've noted the bars at which each entry would be made. All of these are "too early", as is so often the case, but price does hold and make a double bottom when it tests 44 a second time, and if one doesn't mind the opportunity risk, nothing is lost by entering and holding. This is, of course, hindsight, and price could just as easily have fallen through 44 on its way to who knows where. Still might. The last time this happened, price based for three months, and the three months are just about up.
The second chart shows how this would be traded via PA. But there are choices to be made here as well: assume the opportunity risk and buy when the stride is broken, buy the double bottom, short a failure of the double bottom if and when it occurs, buy the breakout through the top of what has become a range by the time the double bottom is made (this range is more easily seen on the daily). Which choice one makes will depend on what balance one seeks between price risk and information risk.
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I have visited this thread several times over the last few months. I found your comments about MACD very helpful. I kind of wish you would have started a new thread to keep this one short and sweet and hidden from those who will only do it harm. Who knows what you might have set in motion? :eek:
What do the TA savy folks think about fitting the best MACD settings to any asset?
It would be easy for me to just say two assets have different volatility or revert more agressively from oversold conditions, and,that sets of differing ma's such as 12,26 or 9,20
are required for good results, but i think this is obvious.
Math aside , just contrast US treasuries to a healthcare etf. TLT to PJP. Both are in lengthy uptrends but get there quite differently and fit/optimize with different MACD settings.
So I am a cripple that needs this stuff instead of pure PA. Nothing wrong with this right? Future not garaunteed of course.
I should add that i dont look for an outlier , lucky, setting but a best general range of settings that does not fall off dramatically to either side of optimal.
And to those who might say it is too generic so it cant work, i see it as just a method to enter trend on retraces and that can work. It may be the trader not the method at fault.
It would be easy for me to just say two assets have different volatility or revert more agressively from oversold conditions, and,that sets of differing ma's such as 12,26 or 9,20
are required for good results, but i think this is obvious.
Math aside , just contrast US treasuries to a healthcare etf. TLT to PJP. Both are in lengthy uptrends but get there quite differently and fit/optimize with different MACD settings.
So I am a cripple that needs this stuff instead of pure PA. Nothing wrong with this right? Future not garaunteed of course.
I should add that i dont look for an outlier , lucky, setting but a best general range of settings that does not fall off dramatically to either side of optimal.
And to those who might say it is too generic so it cant work, i see it as just a method to enter trend on retraces and that can work. It may be the trader not the method at fault.
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Can you explain the pattern.