Macd strategy




Customer reviews
lolli
See ... see all .... too exaggerated, but cool)))
Aphrodite604
Bravo, what a great message
inLove
This medicine is for my penis just what the doctor ordered!
amirov01
Look at impotency from a woman’s point of view!
Plaksa
Absurdity what that
kraizy
This post actually a hand me make a very important decision for themselves. For that special thank you to the creator. Waiting for new posts from you!

Macd strategyMACD-Histogram Drawbacks

The MACD - Histogram is an indicator of an indicator or a derivative of a derivative. The MACD is the first derivative of the price action of a security, and the MACD - Histogram is the second derivative of the price action of a security. As the second derivative, the MACD - Histogram is further removed from the actual price action of the underlying security. The further removed an indicator is from the underlying price action, the greater the chances of false signals . Keep in mind that this is an indicator of an indicator. The MACD - Histogram should not be compared directly with the price action of the underlying security.

Because MACD - Histogram was designed to anticipate MACD signals, there is a temptation to jump the gun. The MACD - Histogram should be used in conjunction with other aspects of technical analysis. This will help to alleviate the temptation for early entry. Another means to guard against early entry is to combine weekly signals with daily signals. Of course, there will be more daily signals than weekly signals. However, by using only the daily signals that agree with the weekly signals, there will be fewer daily signals to act on. By acting only on those daily signals that are in agreement with the weekly signals, you are also assured of trading with the longer trend and not against it.

MACD-Histogram Benefits

The main benefit of the MACD - Histogram is its ability to anticipate MACD signals. Divergences usually appear in the MACD - Histogram before MACD moving average crossovers do. Armed with this knowledge, traders and investors can better prepare for potential trend changes.

The MACD - Histogram can be applied to daily, weekly or monthly charts. (Note: This may require some tinkering with the number of periods used to form the original MACD ; shorter or faster moving averages might be necessary for weekly and monthly charts.) Using weekly charts, the broad underlying trend of a stock can be determined. Once the broad trend has been determined, daily charts can be used to time entry and exit strategies. In Technical Analysis of the Financial Markets . John Murphy advocates this type of two-tiered approach to investing in order to avoid making trades against the major trend. The weekly MACD - Histogram can be used to generate a long-term signal in order to establish the tradable trend. Then only short-term signals that agree with the major trend would be considered.

After the trend has been established, MACD - Histogram divergences can be used to signal impending reversals. If the long-term trend was bullish, a negative divergences with bearish centerline crossovers would signal a possible reversal. If the long-term trend was bearish, traders would watch for a positive divergences with bullish centerline crossovers.

On the IBM weekly chart, the MACD - Histogram generated four signals. Before each moving average crossover in the MACD. a corresponding divergence formed in the MACD - Histogram. To make adjustments for the weekly chart, the moving averages have been shortened to 6 and 12. This MACD is formed by subtracting the 6-week EMA from the 12-week EMA. A 6-week EMA has been used as the trigger. The MACD - Histogram is calculated by taking the difference between MACD (6/12) and the 6-day EMA of MACD (6/12).

The first signal was a Bearish Moving Average Crossover in January, 1999. From its peak in late November, 1998, the MACD - Histogram formed a Negative Divergence that preceded the Bearish Moving Average Crossover in the MACD .

The second signal was a Bullish Moving Average Crossover in April. From its low in mid-February, the MACD - Histogram formed a Positive Divergence that preceded the Bullish Moving Average Crossover in the MACD .

The third signal was a Bearish Moving Average Crossover in late July. From its May peak, the MACD - Histogram formed a Negative Divergence that preceded a Bearish Moving Average Crossover in the MACD .