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MACD - n7kon HELP

 
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Fri Jan 21, 2005 12:35 am    Post subject: MACD - n7kon HELP Reply with quote

n7kon, long time no speak.
I know you use the MACD indicator and I am wondering if you could provide a little insight to your operations.
In charts from stockcharts.com and using MACD 12,26,9 if you look at the two lines that squirm across the histogram I notice they can cross to help give indicators for supporting a trade decision. How do you apply this philosophy.
Also, is the height on the vertical scale where they cross in relation to the zero reference line of any significance to you. At times the Stochastic 12,3,3 can be oversold and yet the worms are still above the zero and vise versa.
Thanks for any insight
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tab321
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PostPosted: Fri Jan 21, 2005 1:11 pm    Post subject: The MACD Reply with quote

Abbo:

This is maybe too general for what you are looking for but The Best Six Months Strategy used with the MACD is supposed to be good. Here is the link to the study:
http//www.stocktradersalmanac.com/default.asp?action=macd

One setting used for entry and another setting used for exits.

Basically, here is the summary:

Quote:
The MACD indicator uses three exponential moving averages: a short or fast average, a long or slow average, and an exponential average of the difference between the short and long moving averages, which is used as a signal line. (See Moving Averages below for a discussion on simple and exponential moving averages.)

MACD reveals overbought and oversold conditions for securities and market indexes, and generates signals that predict trend reversals with significant accuracy.

MACD produces less frequent whipsaws, as compared with moving averages.

Telescan uses a type of shorthand to refer to MACD indicators. An "8-17-9 MACD", for example, uses a short (fast) moving average of eight days or weeks, a long (slow) moving average of 17 days or weeks, and an exponential moving average of nine days or weeks. (The use of days or weeks depends on the time span of the stock graph.)

Gerald Appel recommends an 8-17-9 MACD to generate buy signals and a 12-25-9 MACD to confirm a sell signal for a stock, which has had a strong bullish move.

Regardless of the accuracy of this indicator, one should not rely on a single indicator. Study as many technical and fundamental indicators as possible before arriving at your investment decisions.



Hope this helps
TBeard
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n7kon



Joined: 09 Oct 2004
Posts: 52

PostPosted: Fri Jan 21, 2005 4:51 pm    Post subject: MACD Reply with quote

Hi addo I will be more than happy to tell you how I use MACD. First off remember that MACD is a lagging indicator, so it is a little behind the price move but that can help some times. Look at the Qís as of close today, you will notice that the stoís are below 20 and have been for a while. Also notice that they started up but have since turned back down. This is where I use the MACD the most is to get some kind of a signal what the stock will do near term. You will also notice that the histogram started up but did not make the 0 line. The key thing is the two lines the fast line and slow line the slow line as default setting on stock charts is blue fast is black. Notice that the two lines come came close to each other above the 0 line but never crossed since then they have gotten further apart and continued down when the stoís turned back down. I will stay out of a trade on the Qís until the fast line(black) starts a turn and stoís move above 20 and I get a signal on the candles. This will put me in a trade missing the bottom most times but it also helps me from getting stopped out a lot also. Once the fast line (black) starts to turn up you also want to see the histogram moving back to 0. In fact it should be close to 0 when the fast line turns. The slow line (blue) will confirm the move when it crosses the black but that will be well into the move. Oh buy the way I use the default settings of 12,26,9. I also donít trade a stock if the stoís and MACD are not in same area. If stoís are low and MACD is still high I find another stock to play. I have missed some moves this way but have saved some big losses also. I like to find a stock where I have stoís moving up to or just above the 20 line MACD fast line turning up just a little most times with histogram close to or at 0 and then look for a candle. After that I check the support and resistance to see if the move is bouncing off support and how far resistance is to see if the move will pay enough to play. I use options on a lot of the $40+ stocks so need to make sure there is enough of a move to make it worth while. Hope this helps I am just a rookie so please donít take this to the bank test it out for your self on paper. I would rather miss a trade than get into a looser!!!
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Dip Stick
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PostPosted: Sat Jan 22, 2005 3:25 am    Post subject: MACD Reply with quote

Here is an interesting series of articles on the MACD --->


http//stockcharts.com/education/IndicatorAnalysis/indic_MACD1.html
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Sun Jan 23, 2005 3:26 am    Post subject: Reply with quote

Thanks for the excellent replies. I will research the data
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cmant1



Joined: 22 Jan 2005
Posts: 17

PostPosted: Sun Jan 23, 2005 7:47 am    Post subject: MACD swing trader Reply with quote

I use the 10 30 5 MACD for swing trades.
Trade and fish hard lines tight!
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Sun Jan 23, 2005 6:18 pm    Post subject: Reply with quote

cmant1, Thanks for that. I have those numbers recorded for some time as a set recommended however I cannot recall their orign. Alexander Elders book also suggests 5,34,7 as another popular combination with traders along with the usual 12,26,9. Dont know how useful that is however it is out there for consideration
Do you use the MACD in the same way as n7kon or are there other refinements that you have found useful?
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