Simple Profitable Method
- Thread starter trader28
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Thought that I would try to give a Primer of the MACD for those not familiar with it.
A 12,26,9 MACD is an analysis of the 12 Period Exponential Moving Average (EMA) and 26 Period EMA on the Price Chart.
The Fast MACD Line (Light Blue on MACD Indicator) is the difference between the 12 Period and 26 Period EMA on the Price Chart. In other words, if the MACD Fast Line is positive, the 12 Period EMA is above the 26 Period EMA on the Price Chart. If the MACD Fast Line is negative, the 12 Period EMA is below the 26 Period EMA on the Price Chart.
The Slow MACD Line (White on the MACD Indicator) is the 9 Period EMA of the Fast MACD Line. If both lines (Fast and Slow) cross zero, this usually indicates a strong trend on the Price Chart.
The Histogram (Yellow) is the difference between the Fast and Slow MACD Lines. This is used by some traders to indicate the strength of the trend on the Price Chart. If the Histogram starts to go toward the Zero Line on the Indicator, the strength of the trend may be weakening.
Charles
A 12,26,9 MACD is an analysis of the 12 Period Exponential Moving Average (EMA) and 26 Period EMA on the Price Chart.
The Fast MACD Line (Light Blue on MACD Indicator) is the difference between the 12 Period and 26 Period EMA on the Price Chart. In other words, if the MACD Fast Line is positive, the 12 Period EMA is above the 26 Period EMA on the Price Chart. If the MACD Fast Line is negative, the 12 Period EMA is below the 26 Period EMA on the Price Chart.
The Slow MACD Line (White on the MACD Indicator) is the 9 Period EMA of the Fast MACD Line. If both lines (Fast and Slow) cross zero, this usually indicates a strong trend on the Price Chart.
The Histogram (Yellow) is the difference between the Fast and Slow MACD Lines. This is used by some traders to indicate the strength of the trend on the Price Chart. If the Histogram starts to go toward the Zero Line on the Indicator, the strength of the trend may be weakening.
Charles
Apologies if this is covered in pages 1-156 somewhere but I'd like to solicit some opinions on what filters people are using with this method. Although I agree with the KISS method and don't want to complicate, various traders have noted that they do not take every signal and some discretion is wise. Can you qualify when you choose to ignore a signal?
One filter I have had some luck with is a simple calculation of the slope of the fast MACD line as it crosses the zero line or the slow MACD line. If slope is too low, don't take trade.
One filter I have had some luck with is a simple calculation of the slope of the fast MACD line as it crosses the zero line or the slow MACD line. If slope is too low, don't take trade.
Hope you guys are doing better than me today. Looks like Im headed for my first losing day. Nothing is going right but some days are like that. As long as there arent too many of them its not a big deal. I stepped out for a bit and missed the one trade that would have made money. Think Ill take the dog for a run. SPX and INDU are both sitting right on a daily grail so it is a battle for direction right now.
BB, Hows your afternoon shaping up. I am still in the sim mode with this, but today looks like a Positive day so far. Morning looked ok, what are you using for targets and stops, # pts. ?
I use 10 for tgt, and move to BE when up 7, and get out quick if things get shakey.
I use 10 for tgt, and move to BE when up 7, and get out quick if things get shakey.
I stopped trading when I hit my loss limit which is approx $100, or two or three losing trades in a row. I have noticed that there are times when you are totally out of synch with the market and no matter what you do it is wrong. Today was one of those days for me. I have not been using targets beamer, just been exiting when the bar closes above or below the 3sma. The 3sma is also my approximate stop. That is the one thing I still havent worked out to my satisfaction, the exit.
When you go back over the day and mark all the places where you should have entered and exited it seems clear as a bell but in real time things are not so clear. You often have to anticipate a bit in real time before the actual cross and if your anticipation skills are not working you are in trouble which is what happened to me.
Bearbelly,
One of the things I did was to put "Bollinger Bands" around the
whole thing, my short term setting are 8 or 9/ 1.76 dev.
The bollinger bands with the mid point of 8 or 9 (like t28 would teach) for me seem to be very close. 1.76 seems very close s/d.
When the price bar drops below/above the 8. I will enter the trade until it hits the outer edge of the bollinger band. This trading system used with Bollinger bands just might be the perfect system.
You still have to get a feel for the whole trade but the bands seems to help me visualize it. Try it and let me know what you think!
snarlyjack
One of the things I did was to put "Bollinger Bands" around the
whole thing, my short term setting are 8 or 9/ 1.76 dev.
The bollinger bands with the mid point of 8 or 9 (like t28 would teach) for me seem to be very close. 1.76 seems very close s/d.
When the price bar drops below/above the 8. I will enter the trade until it hits the outer edge of the bollinger band. This trading system used with Bollinger bands just might be the perfect system.
You still have to get a feel for the whole trade but the bands seems to help me visualize it. Try it and let me know what you think!
snarlyjack
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