Simple Profitable Method
- Thread starter trader28
- Start date
- Status
t28 On a day like today, I got whipped around the 0 line a bit with whipsaws. Any helpful tips regarding this? I use 5 minute bars with 30 min for trend.
TRADER28, and BMWHENDRIX . . . hope I'm not butting into a private conversation but here's another approach.
BMWHENDRIX . . . I also use a 5 min chart for intraday (I'm mostly trading Daily and 60 min bars now).
You should have seen two clear signals:
1) If you look at your 12-26-9 MACD, you'll see that there was a subtle DIVERGENCE at approximately 0900 CST (30 min after the Open). This is based on DAILY data only . . . 81 five minute bars . . . 0830 - 1615 CST.
2) Immediately after that DIVERGENCE (which means big slowing of momentum) the MACD dove for the Zero line as price moved in three waves down, three waves up and three waves down again until approximately 1145 CST.
You can't have a more classic indication of a correction than that.
After the MACD kissed the Zero line, price went sideways for a while and then the 1220 CST bar exploded up on large volume.
This accompanied the MACD crossing its average.
Classic stuff.
There was a second crossover trade at 1355 CST.
I'm assuming you got caught by the 1045 CST bar. I don't know if you use Andrews Pitchforks, but that bar made its high at 743.60 then immediately reversed on the next bar. Why? Because it had run into a Median Line.
This is a nifty little system, especially for new folks, but to support it, I would suggest employing more Pitchforks, trendlines and observations about momentum . . . more than another moving average.
Just a thought.
I really took a beating using this method today. I've been doing ok for a few weeks (descent profits) with it but today things just did not "click". Based on the exit-after-10-minute rule I lost out through a few whipsaws and the rest of the days I never got into any trades where th market trended enough to end up profitable or even at the end of the day. Anybody still trading this thing (T28) who can comment? It seems to me the keys to making this work are
(1) be able to consistently identify a flat market early and stay out
(2) come up with a descent exit strategy that can get you out of a bad trade early before you lose too much
(3) determine the best risk/reward ratio (maybe that has to change each day based on how volatile the market happens to be - kind of a scarey thought!)
(1) be able to consistently identify a flat market early and stay out
(2) come up with a descent exit strategy that can get you out of a bad trade early before you lose too much
(3) determine the best risk/reward ratio (maybe that has to change each day based on how volatile the market happens to be - kind of a scarey thought!)
This is a GOOD system (and a good thread). That's the only reason why I'm posting here. I respect what Trader28 did in presenting this. Traders helping traders.
Obviously, I can't answer for him.
My advice:
Stop trading. Start fresh. Forget the Trader28 Rules for a while.
Add a 12 and 26 pd EMA pair to your chart. Study what they do while looking at the 12-26-9 MACD. It will give you a feel for the MACD.
Trading the Zero Line cross is just one way to trade the MACD.
A lot of people would argue that the BEST trades on the LONG-side are actually the MACD crossing its 9 pd Average AFTER a double bottom and/or a MACD divergence.
Others favor taking EVERY cross . . . whether above or below the Zero Line.
Lots of ways to use the MACD. A lot depends on you.
..........................................................
I just looked at the 2 min chart of the ERZ6.
You had two nice divergences . . . one at 9:24 and one at 11:42 CST.
Look at the cross down at 10:32 CST . . . price had just finished three small waves up and had made a Lower High. Beautiful SHORT trade. Classic. (You even had a Zero Line cross a few minutes later.)
Draw a trendline between the Highs at 9:48 and 12:56. There was some churning going on . . . maybe you took a small loss. (Or just maybe you applied an Andrew's Pitchfork Schiff and realized you were in churn and avoided it.)
Regardless of which . . . at 13:36 CST . . . bang . . . big breakout bar on MACD cross.
.......................................
Look . . . Trader28 Rules are terrific for him . . . but the classic stuff . . . the basics . . . don't get thrown away. Remember . . . this is not a mechanical method . . . you have to understand the situation totally . . . Fib, trendlines, momentum divergence are three important factors shaping the market "battlefield." You have to respect them.
If you want to see ANOTHER Master Of The MACD . . . go visit
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID530404
The guy's name is Jack Chan. His approach is based purely on trendlines and MACD crosses. Brilliant. (And no, I'm not promoting his site . . . he does run a pay service. I just admire the brilliance and clarity of his work.)
The MACD is still around after 30 years because it works. Learn to use it.
Make the MACD "yours." Then . . . and only then . . . try Jack Chan's Rules . . . try Trader28's Rules . . . make up your own . . . see what works best at certain times.
Final comment for me on this thread: My son graduated high school last May and is headed for college next January. He trades. He uses the MACD , trendlines and divergence (albeit 60 min and Daily charts).
Period.
That should give you some idea of how valuable this indicator is: I trust it enough for my kids. I think of the MACD as a good, old, pickup truck. It's not perfect and not pretty, but it's RUGGED . . . and it gets the job done.
.................................................................
So don't give up. Trader28's Rules are actually pretty sophisticated even though they're seemingly very simple. But he did a great job of explaining them. You can do well following them precisely . . . and you'll do better factoring in a few other basics.
You've got a good start here. Stay with it.
Good trading to you and all you folks.
And thanks again Trader28 for hosting the best thread I've seen here.
I have decided to use the 9 sma on my charts and to trade at the same time 5 minutes and 15 minutes with the same technique, I have practiced this way friday (just paper trade not real).
I want the macd's ma's to be just about crossing and a clear candle's close under the 9 sma, i go short when this candle's low is broken.
It allowds me to enter with a little anticipation (i don't wait the macd cross to be done completely on a closed candle).
Here is the 15 minutes chart for gbp friday.
On gbp 5 minutes and 15 minutes seem to be the best time frames.
See ya
I want the macd's ma's to be just about crossing and a clear candle's close under the 9 sma, i go short when this candle's low is broken.
It allowds me to enter with a little anticipation (i don't wait the macd cross to be done completely on a closed candle).
Here is the 15 minutes chart for gbp friday.
On gbp 5 minutes and 15 minutes seem to be the best time frames.
See ya
After struggling with this method for couple of weeks, finally I started to get a hang of it. Not with paper trades but with actual trading. The simplicity of this method make me ignore other things I've learned in the past, and this is what destroy my trades. But when I started to apply trend lines, previous days support and resistance, all I can say is WOW!!
This is a beautiful system if you really know how powerful the MACD is.
At first I tend to over complicated things with different MAs, tinkering the MACD settings etc, etc.
But then I reset all my chart and start from scratch.
I trade the Asian Indices futures (Nikkei, Hang Seng, and KOSPI) so I start with the original trader28 settings and search what's wrong with "ME"!! Finally after 2 sleepless night going back and forth the charts it struck me in the head that to to gauge the strength of the trend you simply just have to look at the MACD in the 2 time frames! If both of them are heading differrently (one up, one down) my observations shows that the market MUST be going SIDEWAYS at the current moment. Highest % setups come when both MACD heading to the same direction and crossing zero line at roughly same moment.
I still got a lot to learn, but what a beautiful jump start this thread present me.
I sincerely grateful to trader28, wint, and everybody in this thread (the pros and cons, all of you) for the knowledge so simple and effective (no pun intended
) that won't make this little head explode.
Regards,
Richard from Indonesia
This is a beautiful system if you really know how powerful the MACD is.
At first I tend to over complicated things with different MAs, tinkering the MACD settings etc, etc.
But then I reset all my chart and start from scratch.
I trade the Asian Indices futures (Nikkei, Hang Seng, and KOSPI) so I start with the original trader28 settings and search what's wrong with "ME"!! Finally after 2 sleepless night going back and forth the charts it struck me in the head that to to gauge the strength of the trend you simply just have to look at the MACD in the 2 time frames! If both of them are heading differrently (one up, one down) my observations shows that the market MUST be going SIDEWAYS at the current moment. Highest % setups come when both MACD heading to the same direction and crossing zero line at roughly same moment.
I still got a lot to learn, but what a beautiful jump start this thread present me.
I sincerely grateful to trader28, wint, and everybody in this thread (the pros and cons, all of you) for the knowledge so simple and effective (no pun intended
) that won't make this little head explode.Regards,
Richard from Indonesia
- Status