Nowler's Trading Journal

This is a discussion on Nowler's Trading Journal within the Trading Journals forums, part of the Reception category; Originally Posted by cbrads Hi Nowler, your MACD was indicating a Bullish Divergence on 6th. Did you consider this when ...

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Old Oct 10, 2017, 3:28pm   #46
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Originally Posted by cbrads View Post
Hi Nowler, your MACD was indicating a Bullish Divergence on 6th. Did you consider this when you placed the trade, if not, how do you use the MACD?
My last post was to you as well as Brumby but if you would...where exactly is this bullish divergence in your opinion?
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Old Oct 10, 2017, 3:38pm   #47
 
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Hope this helps a bit
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Old Oct 10, 2017, 3:42pm   #48
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Hope this helps a bit
Wow... I'm so green!
This is deeply embarrassing but I thought it was the height of the histogram that I gauge that off of...

Thanks for the help my friend
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Old Oct 10, 2017, 3:59pm   #49
 
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Wow... I'm so green!
This is deeply embarrassing but I thought it was the height of the histogram that I gauge that off of...

Thanks for the help my friend
Well, the histogram is just represents the difference between the MACD and the signal, so the height of it also reveals divergences. Personally, MACD is one of the very few indicators I have found any value in. It helped me visualise the price structure. I don't use it now, but it helped me greatly in the early days...
If you are going to use an indicator it will make your chart more complicated just because there's more info in front of you. So, it's very important that you understand what it's shows and how it's calculated, otherwise it will just be a hindrance and you might as well ditch it. To help understand the MACD try plotting the MA's, on which it is based, over the price (These are exponential moving averages BTW)
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Old Oct 10, 2017, 3:59pm   #50
 
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Nowler you could also make your own rules based on common sense anticipation and instinct.I did .I lost money trading stocks initially but made it all back and a little more using spreadbetting on the dow and ftse.i did pack in as i found it to stressful and life absorbing.just trade small to begin with mate.
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Old Oct 10, 2017, 4:26pm   #51
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Well, the histogram is just represents the difference between the MACD and the signal, so the height of it also reveals divergences. Personally, MACD is one of the very few indicators I have found any value in. It helped me visualise the price structure. I don't use it now, but it helped me greatly in the early days...
If you are going to use an indicator it will make your chart more complicated just because there's more info in front of you. So, it's very important that you understand what it's shows and how it's calculated, otherwise it will just be a hindrance and you might as well ditch it. To help understand the MACD try plotting the MA's, on which it is based, over the price (These are exponential moving averages BTW)
I have successfully used the histogram to identify divergence in the past (lucky?) but in this example (attached) it identified nothing, whereas using it the way you said does.

I agree with you and I will make sure to better understand it. I do not use anything other than MACD, SMA's (don't really use lately), price action including previous structure and finally, macro news. I am not actually sure whether I could get more benefit from SMA's or EMA's... I just went through a phase of reading about SMA's and I never bothered to take them off my charts as they were not in my way.

I am not quite sure what you are suggesting I do though when you tell me to plot the MA's. Do you just mean that I break the MACD down and compare each section of the MACD to the price chart and see how it works?


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Nowler you could also make your own rules based on common sense anticipation and instinct.I did .I lost money trading stocks initially but made it all back and a little more using spreadbetting on the dow and ftse.i did pack in as i found it to stressful and life absorbing.just trade small to begin with mate.
Hey mate

Perhaps.
I am not against making up my own rules based on experience but I would first like to fully understand how things were intended to be used. Once I know that, then I can tailor it if I see room for it.
Trading small is a must, for sure! Especially if I am still shaky on how to use the MACD.
The way I trade is very time consuming also and it gets quite tiring! Though on saying that, the more I learn, the less mental processing that I need to do
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Old Oct 10, 2017, 4:38pm   #52
 
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I am not quite sure what you are suggesting I do though when you tell me to plot the MA's. Do you just mean that I break the MACD down and compare each section of the MACD to the price chart and see how it works?
Well, your using the MACD on standard settings, so plot two EMA's on your chart, one at 12 and the other at 26. Compare whats happening with the EMAs to whats happening to the MACD. A simple example: when the EMA's cross, what happens to the MACD?
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Old Oct 10, 2017, 4:48pm   #53
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Well, your using the MACD on standard settings, so plot two EMA's on your chart, one at 12 and the other at 26. Compare whats happening with the EMAs to whats happening to the MACD. A simple example: when the EMA's cross, what happens to the MACD?
Ok, I got you.
I have just removed the SMA's and replaced them with a 12 and 26 EMA.
I will check this out across a few charts for the next while and then take it from there.

I really appreciate the help mate
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Thanks! The following members like this post: cbrads
Old Oct 10, 2017, 5:00pm   #54
 
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I'd also add: remove the signal and histogram in the first instance to simplify the MACD, once you've grasped the concept add them back...

The most important line on this simple MACD is the horizontal line = 0
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Old Oct 10, 2017, 5:13pm   #55
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I'd also add: remove the signal and histogram in the first instance to simplify the MACD, once you've grasped the concept add them back...

The most important line on this simple MACD is the horizontal line = 0
Have it like this?
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Old Oct 10, 2017, 5:18pm   #56
 
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Have it like this?
Spot on that mate

I don't like the histogram personally because it draws your attention to the relationship between the MACD and the signal and away from the wider price structure as represented by the MACD line. But that's just my take on it...
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Old Oct 10, 2017, 5:21pm   #57
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Spot on that mate

I don't like the histogram personally because it draws your attention to the relationship between the MACD and the signal and away from the wider price structure as represented by the MACD line. But that's just my take on it...

I'll give it a go for a while.
What's the worst that can happen
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Old Oct 10, 2017, 5:25pm   #58
 
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...And another thing! experiment with different settings (I've never used standard setting myself) As long as the lower value is roughly half of the higher value, anything goes...
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Old Oct 10, 2017, 5:42pm   #59
 
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Some more examples...
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Old Oct 10, 2017, 7:31pm   #60
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Nowler started this thread Something I've been wondering about...
From my short observations, the MACD doesn't print the candle wicks. Would you disagree?

It registers while the price is there and the candle hasn't closed of course but if I'm not mistaken that current MACD bar on the histogram will reduce as the price of that candle receeds.
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