MACD + Histograms/Twiggs/ROC

[Rusty99]

I am a relative newcomer and I have been using a system which uses MACD crossovers + price/volume changes to search for stock. I then use a chart that includes MACD + histogram and Twiggs Money Flow + ROC to choose when to buy and sell. [Twiggs is a modified Chaikin Money Flow]. The signals are a simultaneous rise in Twiggs and ROC + a change in histogram trend (or MACD crossover) for Buy Signal and simultaneous Falls + change in histogram trend for the sell signal. (See chart) I would be interested in any comments you may have on this system. The MACD crossover is generally too late as a signal - hence the use of the histogram trend.

Multicollinearity is reduced with this system as:-
ROC(price) is a momentum indicator
MACD is a trend indicator
Twiggs Money Flow is a Volume Indicator

The system is not mechanical but requires interpretation using the top display.

I use a filter (MACD + Volume and Price changes) to select potential stocks and then use the display to narrow down the choice and further information to buy and sell. It is a short-term system (5 to 10 days or more).

 

[Cartman]

I am a relative newcomer and I have been using a system which uses MACD crossovers + price/volume changes to search for stock. I then use a chart that includes MACD + histogram and Twiggs Money Flow + ROC to choose when to buy and sell. [Twiggs is a modified Chaikin Money Flow]. The signals are a simultaneous rise in Twiggs and ROC + a change in histogram trend (or MACD crossover) for Buy Signal and simultaneous Falls + change in histogram trend for the sell signal. (See chart) I would be interested in any comments you may have on this system. The MACD crossover is generally too late as a signal - hence the use of the histogram trend.

Multicollinearity is reduced with this system as:-
ROC(price) is a momentum indicator
MACD is a trend indicator
Twiggs Money Flow is a Volume Indicator

The system is not mechanical but requires interpretation using the top display.

I use a filter (MACD + Volume and Price changes) to select potential stocks and then use the display to narrow down the choice and further information to buy and sell. It is a short-term system (5 to 10 days or more).

interesting for a first post Rusty ----- r u trying to selling the system ??

ps i can make it simpler for ya !!

 

[It's Snake Pliskin]

I am a relative newcomer and I have been using a system which uses MACD crossovers + price/volume changes to search for stock. I then use a chart that includes MACD + histogram and Twiggs Money Flow + ROC to choose when to buy and sell. [Twiggs is a modified Chaikin Money Flow]. The signals are a simultaneous rise in Twiggs and ROC + a change in histogram trend (or MACD crossover) for Buy Signal and simultaneous Falls + change in histogram trend for the sell signal. (See chart) I would be interested in any comments you may have on this system. The MACD crossover is generally too late as a signal - hence the use of the histogram trend.

Multicollinearity is reduced with this system as:-
ROC(price) is a momentum indicator
MACD is a trend indicator
Twiggs Money Flow is a Volume Indicator

The system is not mechanical but requires interpretation using the top display.

I use a filter (MACD + Volume and Price changes) to select potential stocks and then use the display to narrow down the choice and further information to buy and sell. It is a short-term system (5 to 10 days or more).

There is one point you don't seem to have not addressed.
How do you discern risk and reward from the system?

 

[It's Snake Pliskin]

There is one point you don't seem to have not addressed.
How do you discern risk and reward from the system?

Error,

I mean "you don't seem to have addressed".

 

[Rusty99]

Thanks for the replies.

No I am not trying to sell the system - it is all there anyway!

I would like to know how to make it simpler.

Re: "How do you discern risk and reward from the system?"

This is done by looking at the history of the stock, assuming that future patterns will follow similar trends. I use a stop loss and sell early in the fall phase. There are some false buy signals, when the stock does not rise as expected, but the stop loss minimises the losses. The expected rewards are predicted form the history of the stock and the past gains over a 5-10 day period (depending on the stock). Like any system - you win some and lose some and the higher the risk taken the higher the potential rewards. I am not a full-time trader and I currently use a conservative approach.

I have looked at making it automatic, but there is too much to lose in terms of examining the pattern of the individual stock and info about the company.

I use a stock filter to pre-select potential stocks which produces about 40-100 stocks on ASX each day, and then examine them individually before deciding which ones to buy. I also examine stocks from other sources and use the same chart set to assess their potential. I similarly examine the chart set patterns for stocks in my portfolio to decide when to sell.

As a relative newbie, trading for 18 months, my aim with the post is to get feed-back on the system's potential, the relationhips with other systems and how to improve it, etc.

Cheers

 

[Cartman]

MACD crossover is generally too late as a signal - hence the use of the histogram trend.

Rusty, the MACD cross will more likely get u into a trade too EARLY --- but i know what u mean ---

wait for the next retest of the previous high/low

 

[tech/a]

Whipsaws all over the place.
Only chance it would have of being profitable is if there was a strong bull market where most everything works.
Indicator based methods just get slaughtered on a chart like the one you have shown and in a market such as the one we have currently---and into the forseeable future.
I also note parabolic SAR on your chart but no mention of use.

Sorry but its the sort of "L" platers use of technical analysis,you very often see.
Has no hope of being profitable.

 

[Rusty99]

tech/a - see ya in 2010 !

Meanwhile I'll have a go using indicators in a market that is showing signs of recovery and stabilising.

Cheers

 

[tech/a]

my aim with the post is to get feed-back on the system's potential, the relationhips with other systems and how to improve it,

So your aim has changed in a few hrs then?

I'll have a go using indicators in a market that is showing signs of recovery and stabilising.

 

[Rusty99]

Nothing has changed. The time to make money is when the market has bottomed out and starts to rise again, though the market is likely to be unstable. I've been out of the market for several months due to the crash and I am trying to develop / find a system that works during the early recovery phase - for short term trades 5 -10 days. Volatility has declined and there should be good signals about the potential recovery in February. I'm looking for suggested improvements with my system which works for me.

Cheers,

 

[It's Snake Pliskin]

Re: "How do you discern risk and reward from the system?"

This is done by looking at the history of the stock, assuming that future patterns will follow similar trends. I use a stop loss and sell early in the fall phase. There are some false buy signals, when the stock does not rise as expected, but the stop loss minimises the losses. The expected rewards are predicted form the history of the stock and the past gains over a 5-10 day period (depending on the stock). Like any system - you win some and lose some and the higher the risk taken the higher the potential rewards. I am not a full-time trader and I currently use a conservative approach.

Cheers

Jibberish. Not clear in the slightest.

 

[Rusty99]

Jibberish. Not clear in the slightest.

It is working! Despite the current volatility. 5-10 days seems to be the go.

Cheers

 

[Rusty99]

Jibberish. Not clear in the slightest.

Its 'Gibberish' actually !

 

[GumbyLearner]

Its 'Gibberish' actually !

Gibberish. I dont place cash on gibberish or charts, I believe in people and what they want to buy!

Best thing to do RUSTY over the next 24 nonths is buy some OIL/GOLD!

WHY???

People need them!

Well in truth they dont need gold, but when the currency they are using is debased..U can work out the rest!!!

 

[Rusty99]

Its a Worry!

 

[It's Snake Pliskin]

It is working! Despite the current volatility. 5-10 days seems to be the go.

Cheers

Over how many trades have you determined it is working?

 

[Rusty99]

Over how many trades have you determined it is working?

I have been using the system every trading day for 18 months (5-10 stock portfolio on average - swing trading) - though I pulled the plug in October 2008 and plugged back in January 2009. On average I made 2-4 trades a day => about 1200 trades.

 

[It's Snake Pliskin]

I have been using the system every trading day for 18 months (5-10 stock portfolio on average - swing trading) - though I pulled the plug in October 2008 and plugged back in January 2009. On average I made 2-4 trades a day => about 1200 trades.

Ok just interested, What is your win loss percentage, your positive expectancy and drawdown?

 

[Rusty99]

Ok just interested, What is your win loss percentage, your positive expectancy and drawdown?

My average success rate is around 75% (3 to 4 wins to every loss). I have had returns of 2-3 % per day over the last 3 days on the ASX, which has been generally declining. I lost quite a lot in shedding stock during the recent meltdown. I am acually interested in comments, suggestions and potential improvements on the system rather than discussions about my trading outcomes which depend on how I use the information from the system (risks, judgement, stops etc.)

 

[Cartman]

I am acually interested in comments, suggestions and potential improvements on the system rather than discussions about my trading outcomes

the MACD cross will more likely get u into a trade too EARLY --- wait for the next retest of the previous high/low

have u done any testing to see whether this improves the likely outcome of yr trades