Macd

[Doomberg]

Ok so im getting deeper in to the technical analysis side of things now and this is probably the most
interesting indicator i have come across, but i'd like to ask some questions if you don't mind

When intraday trading what charts are best to use eg 1 min 5 min etc. Does this work on larger time frames too,
i seen a video of someoneusing it on the daily timeframes and i can't see how this is possible to trust because the
volatility or direction can change in a few mins...

When looking to long or short what else apart from MACD do you guys use to indicate a buy or sell?

Thank you

 

[wackypete2]

Using MACD and bollinger bands together has always been useful for me. Use the MACD on a higher time frame to determine direction and wait for a candle to bounce off the bollinger lines in the direction the of the MACD. What you are really doing is waiting for a pull back from the trend.

Peter

 

[Doomberg]

Thanks, how accurate do you find this method to be? And on what time frame to you wait for before the line crosses? Thanks

 

[wackypete2]

What do you mean by accuracy? Your hit or miss rate is determined by where you place your stops and when you take profits. If you put your MACD on a 15m chart it will show you trend direction. Use a 5m chart with bollingers to determine entry. Only take entry with the trend. I like using a 10-12 pip stop loss. You can usually get 8-12 pips wins. Don't let winners turn into losers. Some discretion is necessary.

Peter

 

[Doomberg]

Right thanks, thats exactly what i was thinking around 10-12 pip stop loss as that may be enough if it did take another move before it corrected, the system im working on is looking to take about 10 pips profit as im comfortable with scalping above anything else tbh...

 

[Doomberg]

"From what I have seen MACD works better with currencies than indices or shares. One reason for this is probably due to the fact that currencies are 24hrs a day where indices and shares have gaps in the charts in the mornings. I dont think you can make money out of the standard MACD settings."

This was posted by a guy called breadman back in 2005, is this just garbage or is there any truth in the above?

 

[Shakone]

What are you asking from an indicator?

Are you using it just for entry, or for trade management as well, or for exit as well?

If I pick any indicator that has lag, and I enter a trade long on a timeframe, say 5 mins. Then within the next 5 mins, suppose price drops 300 pips/points. It's possible. Are you waiting for that bar to close, so that your Macd can tell you that you're wrong and you need to exit? I hope not.

So it's a bit pointless to ask whether macd can make money for you. Can a good entry make money for you? Yes, if you've got a good exit to go along with it, and money management. Otherwise, it doesn't make much sense. Use an indicator if it helps you. But how can it - alone - make you money, unless it gives you entry, management and exit?

 

[Doomberg]

What are you asking from an indicator?

Are you using it just for entry, or for trade management as well, or for exit as well?

If I pick any indicator that has lag, and I enter a trade long on a timeframe, say 5 mins. Then within the next 5 mins, suppose price drops 300 pips/points. It's possible. Are you waiting for that bar to close, so that your Macd can tell you that you're wrong and you need to exit? I hope not.

So it's a bit pointless to ask whether macd can make money for you. Can a good entry make money for you? Yes, if you've got a good exit to go along with it, and money management. Otherwise, it doesn't make much sense. Use an indicator if it helps you. But how can it - alone - make you money, unless it gives you entry, management and exit?

Where did i once say any of this?

I just think its a good tool along with other things

 

[Shakone]

You're asking questions about macd, on what timeframe it works, how accurate it is, and whether the statement that macd can't make you any money is garbage or not. In light of what I've just posted, none of those questions make sense. That is what I'm trying to get across.

As a tool, to help you, don't think there is anything wrong with that. Do what works for you. But think about what you're asking from the indicator.

 

[anley]

Doom, think about this.

You're new to the game and have just discovered the MACD.

It's been around for years.

95% of technical analysts know about it.

Probably 10%-20% of the market uses it in some form or another.

Making money in this game is very very hard.

Add all those together and what have you got re the MACD? Probably just another useless canned indicator that was probably good for a year or so when it was first developed.

Summary: Using canned indicators like the MACD is futile unless you use them in unorthodox ways.

Just trying to help.

 

[Ambrose Ackroyd]

Summary: Using canned indicators like the MACD is futile unless you use them in unorthodox ways.

Exactly right.

 

[0007]

Summary: Using canned indicators like the MACD is futile unless you use them in unorthodox ways.

Just trying to help.

That's an interesting comment worthy of expansion. Logically, doing what everyone else is doing is going to produce similar results and maybe this is why (apparently) most traders aren't terribly successful.

I've found two approaches that can be helpful:
(1) do what the rest do but do it better
(2) do something different.
Although I try to combine both I suspect everyone is doing (1) so I guess the leverage is with (2). My (2) is use of stock cycles.

So what are other people's (2)? And what are the unorthodox ways of using indicators?

 

[timsk]

That's an interesting comment worthy of expansion. Logically, doing what everyone else is doing is going to produce similar results and maybe this is why (apparently) most traders aren't terribly successful.

Using indicators in unorthodox ways may indeed produce unorthodox results. Top of my list is to use them correctly in the first place. My strong suspicion is that very few traders do this and, consequently and unsurprisingly, they suffer (largely avoidable) losses.

 

[anley]

Also think about this relating to Tim's post.

Anyone can probably use the MACD with standard settings to make a fortune. That's the good news.

The bad news is this. It will take a minimum of 1 year, maybe even up to 5 years to properly master it and when I say master it I mean know when to rely on it, and when to fade it (ie, the all-important 'failures). YOu see it's all about knowing the quirks and subtitles of an indicator and that takes a lot of time.

During that year you basically have to watch it 8 hours a day on multiple timeframes, 5, 30, 50, 240, Day, Week and Month. No real money trading, just watching and learning.

Trouble is most won't want to put the effort in.

Same with winning Gold at the Olympics. Most won't want to put the effort it, ie many years of living like a monk, training 4-8 hours a day, focus on your diet, not going out etc etc.

 

[Doomberg]

Thanks for the replies guys, and RE macd... i may not know the exact mechanisms behind it and MA's, but it has certainly added to my edge, i like to scalp and if anything, knowing which way the momentum is going helps you... i like the stochastics for this reason too, and for anyone who says that these indicators are useless are missing something imo, they are nothing like "Stealth Trader 5000" type of gimmicky indicators, i'd say they are certainly another string to your bow