Understanding MACD

[alexache]

Thanks for your input here. This has helped me.

 

[jprad]

Quote from Arcanine:

What information does the MACD present about the structure of the market and the movement of price, particularly from a mathematical perspective?

It will show a second order velocity output if the market contains a dominant cycle that is not squelched by the two low pass filters that make up the MACD. The histogram variant shows an acceleration derivative of velocity.

 

[bstay]

article from the inventor himself.

 

[PetaDollar]

Please refrain from personal attacks

 

[ProfLogic]

Quote from bstay:

article from the inventor himself.

The MACD was a cutting edge tool when it was invented and for about 20 years after its introduction but like any tool that is over 35 years old, it has outlived it usefulness.

Come on people. The PC was a futuristic thought when Appel introduced his MACD. Do you not think that since the introduction of the PC and the many thousands of inroads we have collectively made in technology that a 35 year old unbalanced moving average is still a viable trading tool?

 

[ammo]

i dont use the indicators,but columbus used charts to get here, and they are still useful today,so if that is based on things in the market that havent changed,its still valid, i watched jsspmk bank a mint in es journal with charts and posted trades ,entries and exits, it still works for some people,like any indicator, if you use it long enough and correctly,it pays off

 

[Random.Capital]

Quote from Arcanine:

What information does the MACD present about the structure of the market and the movement of price, particularly from a mathematical perspective?

None. It's a specific kind of rear view mirror, like any other indicator.

 

[ProfLogic]

Quote from ammo:

i dont use the indicators,but columbus used charts to get here, and they are still useful today,so if that is based on things in the market that havent changed,its still valid, i watched jsspmk bank a mint in es journal with charts and posted trades ,entries and exits, it still works for some people,like any indicator, if you use it long enough and correctly,it pays off

If Columbus had access to GPS he would have used it.

I agree that it CAN still be used today but if you are starting out in 2010 trading why on God's green earth would you learn or utilize 35 year old tools. Today there are better more consistently profitable tools to use.

The Amish don't use power tools to build homes and they still build homes but let me tell you from experience my new home is far better constructed, stronger built and more energy efficient than any Amish built home because I choose to use the best technology in its construction. The key there is . . . I choose to use the best possible technology available.

 

[ammo]

touche prof

 

[bstay]

Quote from ProfLogic:
If Columbus had access to GPS he would have used it.
I agree that it CAN still be used today but if you are starting out in 2010 trading why on God's green earth would you learn or utilize 35 year old tools. Today there are better more consistently profitable tools to use.
The key there is . . . I choose to use the best possible technology available.

what are the newer tools if you could suggest a few? besides the regular MACD, RSI, Williams%R, ATR, ..... all those old stuff invented by George Lane, J Welles Wilder, Gerald Appel?

thanks.