Understanding MACD

[rod]

Quote from PIPMAGIC66:

Price and volume work a lot better..and faster. P&V is getting it right from the teat. Hot N wet. MACD is like buying a quart at walmart a week later

what a great analogy pipmagic66...LOL

 

[intradaybill]

Quote from PIPMAGIC66:

7 pages on the MACD..amzing

Still dark ages...a better thread would be "Forgetting MACD".

 

[IanMacQuaide]

http://www.elitetrader.com/vb/showt...ghlight=simple profitable method&pagenumber=1

Thats one way to use the MACD.
I use a variant of it on range charts.

imho, ymmv and fwiw

 

[jprad]

Quote from kut2k2:

One caveat: you'll see the misconception that TSI and the so-called Ergodic Indicator are identical. This is false, as can be seen by a simple perusal of Blau's Table of Content (use the "Look Inside" feature at the amazon page). An Ergodic Oscillator (not Ergodic Indicator) can be made to apply to any oscillator. Basically it's just a generalization of what Appel had already done with the MACD: making a signal line and subtracting it to get a "histogram". Blau generalized this procedure to apply to his momentum indicators (aka oscillators) and called it ergodic cuz that soundz kewl, d00d.

Your oversimplification misses on a couple of points.

For starters, no where is Blau's book does he ever mention, much less create, a histogram ala the MACD histogram.

Second, he explicitly defines the (not "an") ergodic oscillator on pg. 18:

Ergodic Oscillator
...we shall employ a similar oscillator based on the True Strength Index called the Ergodic Oscillator, or simply, the Ergodic. The oscillator consists of two parts: the Ergodic and its Signal Line given by:

Ergodic(Close, r) = TSI(Close, r, 5)
Signal Line(Close, r) = EMA(TSI(Close, r, 5), 5)

Any other use in his book includes the root indicator in its name, like Ergodic_TVI or Ergodic_CSI for example.

You also overlooked the fact that his use of "ergodic" refers to a fixed second smoothing value of 5 for whichever indicator he's basing it on as well as a fixed 5 period EMA for it's associated signal line.

 

[kut2k2]

Quote from jprad:

Your oversimplification misses on a couple of points.

For starters, no where is Blau's book does he ever mention, much less create, a histogram ala the MACD histogram.

Second, he explicitly defines the (not "an") ergodic oscillator on pg. 18:

Ergodic Oscillator
...we shall employ a similar oscillator based on the True Strength Index called the Ergodic Oscillator, or simply, the Ergodic. The oscillator consists of two parts: the Ergodic and its Signal Line given by:

Ergodic(Close, r) = TSI(Close, r, 5)
Signal Line(Close, r) = EMA(TSI(Close, r, 5), 5)

Any other use in his book includes the root indicator in its name, like Ergodic_TVI or Ergodic_CSI for example.

You also overlooked the fact that his use of "ergodic" refers to a fixed second smoothing value of 5 for whichever indicator he's basing it on as well as a fixed 5 period EMA for it's associated signal line.

The very fact that he created the Ergodic_CSI and the Ergodic _TVI should have been a big fat clue to you that the name "Ergodic" is not unique to the TSI. The fact that his book is poorly edited to reflect this fact should also be obvious. And when you make an Ergodic Oscillator, this creates what is typically referred to as a "histogram". Whether this term makes sense or whether or not Blau specifically referred to it is irrelevant. TA has a long history of terms that make no sense in the conventional way: Lane's "Stochastics", the "Relative" Strength Index (not to be confused with actual relative strength), Blau's "Ergodic" whatever, etc.