Experiments in Technical Analysis

[uasish]

karthikmarr,
If anybody can prove this code to be copied i stand to be expulsed from this forum with abuse.You are very right my poor understanding of english language has landed me in this kind of trouble with proper knowdlegable traders in the past & modesty is most often been eqated with weaknees.Code writing in MS ,as per customer specification is my other proffession than trading & charges are only 1500/ per hour.Good bye.Take
care.
Asish

 

[uasish]

Hi,
This is the link for an Expert of MACD_H ,who only copy paste from other's code.
Asish
http://www.4shared.com/dir/1118945/9235f9c9/sharing.html

 

[uasish]

Mr,Karthikmarar,
I sincerely apolozise if my immature post hurts your feeling,it is just a joke.
Once again pardon me .
Regards
Asish

 

[mfire]

Hi Asish

I do apologize for my inability to put across my ideas clearly. Maybe the fault lies in my poor knowledge of the english language. I wish to make it clear that this thread is not on MACD Histogram tough it is a part of the disscussions.

Here some not so serious traders are trying to share their experiments in Technical Analysis. Also the series on MACD is on how to trade the MACD better and not on reworking the MACD. There has been no attempt on a reworking to get the desired results. All formulas are the conventional , accepted formulas. My poor understanding of english and pathetic way of experssing things may be the reason for your misunderstanding. Or is it my poor understanding of the MACD itself, I wonder.

Copying some code and posting in a forum is very easy. The trouble lies in explaining the indicators working and how to trade that particular Indiator. And explaining it to the newbie is even more difficult.

I wish that you were kind enough to enlighten us on how the MACD code posted by you is better than the conventional one and also how to trade it.
Unfortunately we did not have that previlage from a serious trader.

Anyway find enclosed a chart with conventional MACD and your MACD. Again apologies for my impertinence in putting it as a Histogram in Amibroker.

warm regards

Karthik

Hello Karthik Sir,
As usual your work is great. Your explanation has helped me to understand many difficult aspects of technical analysis though I am newbie. Keep it up.
Mohan

 

[uasish]

Hi,
This is the link for an Expert of MACD_H ,who only copy paste from other's code.
Asish
http://www.4shared.com/dir/1118945/9235f9c9/sharing.html

http://www.4shared.com/file/10724045/61f147ef/MACD_H.html

 

[karthikmarar]

Mr,Karthikmarar,
I sincerely apolozise if my immature post hurts your feeling,it is just a joke.
Once again pardon me .
Regards
Asish

Dear Asish

Appreciate the humility shown by you, a rare attitude seen nowadays. I too feel that I was a bit harsh in my reaction. Thanks for posting the code for the MACD using the TSF function. It is a pleasure to see new approaches.

Let bygones be bygones Let us go on with learning and sharingthe very spirit of this great forum.

Warm regards

Karthik

 

[karthikmarar]

hello sir , as usual.... your work is great...waiting forafl with weekly histogram..& pls add exloration in new afl....thanks ..

Hello Karthik Sir,
As usual your work is great. Your explanation has helped me to understand many difficult aspects of technical analysis though I am newbie. Keep it up.
Mohan

Casoni, Mohan,

Appreciate the kind words. It is a great feeling to know at least few are benefited by the posts. It makes all the efforts worthwhile.

The new afl will be posted soon...

Warm regards

Karthik

 

[karthikmarar]

Hi Friends

Hope to complete the Trading the MACD series in the next two days.

WEEKLY MACD HISTOGRAMS

Next we will see how to use the Weekly Histogram with our daily MACD chart. Amibroker is wonderful software, which enables plotting of the weekly Histogram in our daily chart. Again we will plot the weekly MACD Histogram as a ribbon. We will color code it for easy understanding.
The color-coding will be as follows

Histogram above zero and rising Dark yellow
Histogram Above zero and declining - Yellow
Histogram below zero and declining - Blue
Histogram below zero and rising - Sky blue

Trading clues:
Entries when the weekly MACD is positive, the Weekly Histograms turns positive and the daily Histogram is positive gives good trades.
Shorts when the Weekly Histogram goes below zero, weekly MACD declines / turn negative and the daily Histograms is negative gives good trades.
One can define many rules in combining the Weekly MACD and MACD Histograms with the daily MACD and Daily Histograms. I will leave that to you. Chart 10 provides some examples.

You would have noticed that it would be difficult to put these rules into a definite mechanical Trading system. It takes a bit of eyeballing and with a keen eye it is easy to pick some good trades. Of course one can run a scan to get a short list of stocks with zero line crossover, power dips and power hooks etc. Then it becomes necessary to eyeball the charts. I will post a scan afl towards the end of this discussion. The expert programmers can definitely come up with much better scans.

To Be continued...

regards

Karthik

 

[karthikmarar]

Re: Experiments in Technical Analysis - Trading the MACD

Hi Friends

Thanks to the extended weekend we are enjoying here I am able to look at the market and it does feel good posting again the forum.

The nifty seems to in a interesting situation. Nifty has broken some important levels. After a long time the nifty has made a lower high and then a lower low. Theoretically this makes Nifty poised for an intermediate down trend. Of course nifty has been defying all technically indicators..(Maybe due to recently reported manipulations by the D company). Anyway the coming week will be quite interesting with the budget round the corner.

Some important levels on the downside could be 3881-85, 3838-41, 3771 , 3732 etc. On the upper side 3955 is important. If nifty closes above this on Monday it will be good. 4175 has become a significant level to watch for.

Let me continue with the Trading the MACD series..

DIVERGENCE

Next we will look at Divergences in the MACD. In technical Analysis Divergence is said to occur when an Indicator movement does not agree with the price movement. Divergence can be Bullish or bearish. If the indicator is making lower highs when the price is making a higher high there is supposed to a bearish divergence. In the same way when the Indicator makes higher lows when the price makes lower lows there is a Bullish divergence. Divergence indicates a reversal in the current trend.

We can use Divergence in the MACD itself or in the MACD histogram. Dr. Elder considered Divergences in the MACD Histograms as one of the most powerful signals available to the Technical Analyst.

However in case of Divergence one has to wait for a confirmation. Convergences are known to fail frequently. Such failures were quite evident on the Nifty in the recent past.

An example of a Bearish Divergence shown in the chart of Apollo tyre (Chart-11) clearly forewarn the impending weakness

An Example of Bullish Divergence is given in the chart of Asian Electric (Chart-12). When the stock was making a lower low the MACD made a Higher Low in July last.

To be continued

Regards

Karthik

 

[karthikmarar]

Re: Experiments in Technical Analysis - Trading the MACD

Hi Friends

Continuing with the Divergence...

Now let us look at the Divergences in MACD Histogram. I find divergences in Histogram more useful than divergence in the MACD itself. It is also one of the favorite tools for Dr.Elder.

Many times the Histogram throws up divergence even when there is no divergences detected in the MACD. Similar to the MACD divergence divergence on the histogram occurs when the peaks do not correlate to the stock peaks and troughs. A bullish Divergence occurs when the histograms makes a negative peak smaller than the previous one when the stocks make a lower low. In the same manner a Bearish divergence occurs when the histogram makes a positive peak smaller than the previous one and the stock make a higher high.

Chart 13 and Chart 14 provides some examples.

Regards

Karthik