Experiments in Technical Analysis

[karthikmarar]

Re: Experiments in Technical Analysis - Trading the MACD

Hi Friends

Continuing with Trading the MACD.. Combining the Stochastic with MACD

Another good use of the Stochastic with MACD is it helps in finding good entry/pyramiding or add on opportunities.

When the stochastic is coming down from over bought region and turn back and if the MACD is positive it represents good bullish moves.

In a similar way when the stochastic is rising from the over sold region and then turns back and if the MACD is negative it represents strong bearish moves. This provides good shorting opportunities.

See Example 6.

In order cut things a little short next we will go to combining the weekly MACD with our Daily MACD analysis. Combination with other indicators can be discussed later if time permits..

Warm regards

Karthik

 

[karthikmarar]

Dear Karthi,

Thanks for instan reply.I will be watching this space for for further updates on Trading with MACD. Kindly advise the steps how to use the AFL provided in the post

Thanks

Rajeev

Rajeev

First change the extension from TXT to AFL and then save the file under the Amibroker/formulas/Custom folder. So when you open the AB this afl will be available as a custom indicator which can be then inserted into your chart window. Hope this help. If I have not understood your question please do explain so that a proper Answer can be provided..

regards

Karthik

 

[Spiderman]

HI OXUS,
should I copy paste mabitus exe(251kb) into equis metastock folder?
please tell me how to use it? I use metastock8 pro .

thanks and regards,
spiderman

 

[oxusmorouz]

Just double click on the exe file. It will automatically install into metastock.
You can view the expert as "zz Mabitus ADX" and the indicator as "zz ADX MACD bullish". The indicator is with customizable time frames (i.e, you can decide on the period for ADX, moving average, and signal line if you insert the indicator in a new window). I have used a 5day ADX, 13day MA and 9 day signal line (as mentioned by Karthik) as default.

Edit:
Please ignore the copyright which comes with the system. I was just testing it...sorry if it caused any trouble...

 

[Spiderman]

hi oxus,
I am getting this error on double clicking,
" no importable files exist in the source folder"

spiderman

 

[oxusmorouz]

Here is another link:

http://rapidshare.com/files/13885023/FOSetup.exe.html
I've tested it in both metastock 9 and 10 and it works fine.

If the self extractor doesn't work, right click on the exe file and click on "extract". Import it into metastock:
tools --> expert advisor --> organizer --> import --> source directory.

 

[ragh_ash]

Hi ragh-ash

Please set the Background in the prefrence window to "Black" and the Axes to White... Enclosing a screen shot of my settings..

regards

Karthik

karthik,
thanks. but i already know to do it from preferences windows, i was wondering if i can set options for one particular chart? actually i set options for individual chart also through AFL
regards

 

[karthikmarar]

Hi ragh_ash

I think Setting the chart options for a particular chart may not be possble. Since I am novice in coding I am not really qualified to say this. May be experts like Saji can tell us something more on this.

I use universal setting for all the charts. However the System AFL normally have their own settings.

regards

Karthik

 

[karthikmarar]

Re: Experiments in Technical Analysis - Trading the MACD

Hi Friends

We continue our discussion on Trading the MACD.

MULTIPLE TIME FRAMES

Next we will discuss how we can use the weekly MACD to assist our analysis of the daily charts.

For this first we will have to compare the weekly charts with the daily charts. Changing time frames again and again to check is not a bright thing to do and it is cumbersome. So we have to have the Weekly MACD overlaid with the Daily MACD. Two MACD plot on the same can be confusing. So we will plot the Weekly MACD as a ribbon on the daily MACD (Here is where metastock gets a beating ). This can be easily done in AB. We will color code the ribbon for easy understanding as follows

Weekly MACD above signal line but below zero. Pale green
Weekly MACD above signal line and zero. Lime
Weekly MACD below signal line but above zero. Orange
Weekly MACD below signal line and zero. Red

The colors can be changed as per your Liking.

Now let us define the Basic rules

Rule : Buy signals on the Daily MACD when the Weekly MACD is above the signal and zero gives entry into good bullish moves. Buy signals on the Daily MACD when the Weekly is above the signal line but still below zero do provide early entry but are not very reliable. See the Chart enclosed.

(In our charts Daily buy signals when the Weekly is in green will be a good Entry)

Naturally the weekly MACD is more lagging to catch up with the Daily Signals. Weekly MACD becomes Bullish only after many weeks after the daily becomes bullish. So how can we still get an early entry? The Weekly Histogram can be used to provide some early signals. We will discuss this later.

Rule: When the Weekly MACD falls below the signal line it is time to consider exiting if you are still in.

Earlier we saw that when the Daily MACD is below the signal line but still above zero is not a matter of serious concern. That time the stock may be actually moving sideways. But then if the Weekly MACD also moves below the signal line then it is time to exit.

(In our charts weekly in orange is a clear sign to exit)

One thing to remember there are clear-cut rules in TA. There s no certainty of these signals. We are talking of probability. These rules provided here are only high probabilities.

Chart Enclosed

Regards

Karthik

 

[oxusmorouz]

Since this uses a weekly MACD, I guess the exit/entry signals occur only after the friday close...