MACD Crossover Sell Signal

[Boggo]

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Often it can trigger preset buy or sell without the SP trend on the daily charts with their averaged plots of the closing price showing why it happened. Regardless of the chart inaccuracy due to averaging and delay our trades and triggers are based on real-time price action unless our trading platform or broker is also running on delayed data......which is highly unlikely imo.

My experience has been that this occurs with all TA indicators MACD included and it makes them less useful than they should have been in popular theory.

Mate, can you post up a chart of what you are saying. To me at the moment it seems that you are blaming indicator inaccuracy because of delayed data - mixing apples and oranges there.
The indicator doesn't know that it is delayed data, it simply responds to the data that it gets.

Also, an indicator set of parameters that are optimised for weekly data wont work accurately on daily or hourly data, each timeframe is different and requires a different approach (or indicators).

Indicators are only that, an indication of what has occurred but can be used to assist in recognising a potential pattern developement - totally useless for trading with as a stand alone buy sell system.

 

[Firefly_au]

Why on earth would you trade intraday without R/T data feed.
Why on earth would you use oscillators to trade intraday!

Why would you trade Aussi stock intraday!

If you can't afford a live feed you shouldn't be trading.

Yes I agree, how ever I suspect many interested in shares, trade initially via a superannuation platforms which most seem to rely on delayed data. Most indicators can be set with setting marginally useful for intra day trades and they can still be used to form a picture about the likely course of trade.

 

[tech/a]

Yes I agree, how ever I suspect many interested in shares, trade initially via a superannuation platforms which most seem to rely on delayed data. Most indicators can be set with setting marginally useful for intra day trades and they can still be used to form a picture about the likely course of trade.

Those with Super would be trading anything BUT intraday.
Unless you are using an oscillator based system I personally find
the information found in oscillators of little use, perhaps with the
exception of divergence. Some volume indicators and ATR.

But I have seen some excellent systems based around Oscillators.
A totally different topic.

 

[Firefly_au]

Mate, can you post up a chart of what you are saying. To me at the moment it seems that you are blaming indicator inaccuracy because of delayed data - mixing apples and oranges there.
The indicator doesn't know that it is delayed data, it simply responds to the data that it gets.

Also, an indicator set of parameters that are optimised for weekly data wont work accurately on daily or hourly data, each timeframe is different and requires a different approach (or indicators).

Indicators are only that, an indication of what has occurred but can be used to assist in recognizing a potential pattern developement - totally useless for trading with as a stand alone buy sell system.

I haven't thought about collecting charts to demonstrate this effect well, so sorry I can't show you with charts just now. I am saying I believe that using closing prices and smoothing due to delay and averaging does cause indicator inaccuracies relative to the actual market price action, so I doubt they can be used as reliable triggers.

I guess I basically agree - "indicators are only indicators" they can be setup for various time frames minutes , days or weeks. Which ever is most appropriate to assist the personal trading plan. I will add this though, any workable trading plan should include predetermined entry and exit triggers. These have to be determined prior to entering the position otherwise the chances of winning come down to pure luck, not good planning.

I was wondering if there was anyone here that has successfully used the MACD to generate trigger points?

 

[tech/a]

I will add this though, any workable trading plan should include predetermined entry and exit triggers

I don't know that this is totally necessary or true.
For me exits are often generated by price action un known in advance
so it cannot be pre determined.
A trailing stop may not have a pre determined level (ATR).

You may find this interesting

http://summit.sfu.ca/system/files/iritems1/7584/etd2727.pdf

 

[AverageJoe]

prob a lot more hindsight than foresight with laggards .....true that with a lack of knowledge a trading plan can be made based on these indicia, i've done such a thing, suffice to say the reason is because the more I ask "what if this..?" then the closer i am drawn to price as most traders eventually do....afterall, if everything starts with the price, it ends with price too ....everything else surrounding price is an add-on based on lack of knowledge or lack of data or both and that's not a judgement so much a recognition of which part of the journey a trader is on
the difference is in the time taken to make a decision, enact the decision and then have the courage to retract the decision.....I'm saying the closer that price is transacted at the price and not at the laggard the more likely the trader is to gain courage (eventually called experience) and take the next step to being an effective trader

the bottom line aside from the monetary risk is the large amount of time involved


thanks, AJ

edit .....this is where the utter bollox of discipline comes in.........the distraction..we used to see this stuff all the time.....traders going on a rant about losing discipline......still comes down to lack of knowledge or lack of data....still comes down to intelligent and cognitive logic mixed with courage based-on .....if you have good data youre likely to have "better" courage even if is a little dutchy but if youre drawn out on time with an one-hit-wonder indicator action AND have to have discipline based on a laggard that can have several interpretations then the stuff is stacked against you........

A couple of things I have learned through my journey of trading. I started off with the usual MACD,STOCH,BOLLY BANDS, FIBS etc.. And these were on my chart all at once! Later I started adding Harmonic pasterns but stopped short of indulging in EW/GANN. Like everyone else starting, I thought more is merrier and more powerful a signal. It took a few years of religiously applying the signals with real CASH$ to discover that something I am doing is not right. I now use naked chart but the transition was difficult as I felt I had burst my own bubble.

Never looked back to these indicators or fancy method. Less is more including trading!

Whether structured system mechanical or discretionary trading style, the plan is the most important thing to follow. Risk reward analysis is what I use to judge if I am going to take a trade with pre-defined trade management. The price is random as soon as I pull the trigger and I will have to depend on previous back test to show me the edge. A few losses does not break a system as a lot of traders will soon discover when pressed psychologically. It is a mind set game and trading psychology I rate much higher than where one gets in or out.

Each market type is a different "beast". I suspect you cannot just transfer a successful system from stock to FX trading. They each have their own personality. One deals with market depth that one can see through the progression while the other needs rapid eye movement when looking at DOM. Stocks will require fills very much dependent on how active and large average traded by volume while Fx is never a problem unless you are the bank processing a large Client's order.

If it works with maths indicator then all good but I have not found it to be useful, more a hindrance.

Good luck

 

[Joules MM1]

A couple of things........ The price is random as soon as I pull the trigger and I will have to depend on previous back test to show me the edge.

not sure i follow....youre saying price is random, how come only once you've pulled the trigger.....if price is ever random then it's random before, during and after, yeah?

if price is random once youre in, how can you find an edge...an edge defines consistant probability which itself is not random....yeah?

if what you say is true then your game is dependent heavily on money management alone, yeah?

you may have something......just kinda reads like weird logic to me....

edit

MACD,STOCH,BOLLY BANDS, FIBS etc.. And these were on my chart all at once! Later I started adding Harmonic pasterns .....

that doesnt clearly show you were wrong, it clearly shows a lack of specificity in one regime, too much fuzzy info, too many distractions......again, it doesnt mean you are wrong in any single measure, rather not enough inspection and concentration on one thing, without one step at a time, throwing out what hasnt worked before moving onto include the next measure

yes?

 

[Firefly_au]

not sure i follow....youre saying price is random, how come only once you've pulled the trigger.....if price is ever random then it's random before, during and after, yeah?

if price is random once youre in, how can you find an edge...an edge defines consistant probability which itself is not random....yeah?

if what you say is true then your game is dependent heavily on money management alone, yeah?

you may have something......just kinda reads like weird logic to me....

edit


that doesnt clearly show you were wrong, it clearly shows a lack of specificity in one regime, too much fuzzy info, too many distractions......again, it doesnt mean you are wrong in any single measure, rather not enough inspection and concentration on one thing, without one step at a time, throwing out what hasnt worked before moving onto include the next measure

yes?

From my experience, since most indicators are derived from basically the same data they all end up indicating the same thing with only minor but sometimes significant differences in timing....so basically it is better to keep indicators simple and well understood than go for complexity imo.

 

[AverageJoe]

not sure i follow....youre saying price is random, how come only once you've pulled the trigger.....if price is ever random then it's random before, during and after, yeah?

if price is random once youre in, how can you find an edge...an edge defines consistant probability which itself is not random....yeah?

if what you say is true then your game is dependent heavily on money management alone, yeah?

you may have something......just kinda reads like weird logic to me....

edit


that doesnt clearly show you were wrong, it clearly shows a lack of specificity in one regime, too much fuzzy info, too many distractions......again, it doesnt mean you are wrong in any single measure, rather not enough inspection and concentration on one thing, without one step at a time, throwing out what hasnt worked before moving onto include the next measure

yes?

Probably the wrong word to use when explaining price. What I am saying is that the best indicator or whatever tool to give the setup is only a probability play. It does not guarantee the setup will generate a profitable outcome. Once you pull the trigger, the market decide if your edge will play out. Sometime it will and other times it won't. The edge is when the times that does will make you more money than those that doesn't so Risk Reward Ratio comes into play.

As an example;

If you risk 10 bucks to make 2bucks, you will need a big win-loss ratio to make this type of system work. If you win 8 out of 10 trades, you are still losing money if we use constant money money. If you system risk 10bucks but makes 30bucks then you can see if in 10 trades if you win 3 out of 10 trades, you are still making money.

If you use say a system for example based on MACD since we are discussing this indi, how do you calculate your target? There are obviously ways around such shortfall and the trader using this method will probably say since it is a trend following indicator, if in 10 trade buy or sell signals, they catch 3 of the big trades and rode the trend till the top or bottom depending in direction, they will make up the shortfall of the 7 losing trades.

In my backtest when I was into mechanical style trend following system in the past on Oz stocks, the win loss was less than 40% winners but it still made money when there is a bull trend. Mine was a long only. I just did not feel comfortable as the GFC rout took hold, firstly I did not get many buy triggers understandable and secondly my system was not backtested under such an extreme market rout. Even though I tested it on the dot com boom/bust, GFC was a different beast as info started filtering out on the state of the capital markets. As humans are creatures of habit, I soon forgot about stocks and started focusing on FX.

So back to what I am inferring, it's a combination of MM, TM, position sizing and compounding or non compounding that can play a big factor to the personality of one's system. I have not done much work on compounding, itself is a dangerous beast if the system has a low win loss ratio if my suspicion is correct.
I trade naked charts using price action so I see cluttering even if I put a MA on the chart but that is just me. I try to get in on an "early" signal and indicators gives me a later signal so the signal will require a bigger stop hence a lower risk reward ratio.

 

[AverageJoe]

I am probably now discussing out of the realms of MACD but this is a price action I noticed from Friday's evening Oz time pre-US news on Consumer sentiment. I do not trade news nor have I found a profitable way to do so but this is what I have found as the price action revealed. Also I do not take trades even 15m chart on a Friday evening leading into the weekend with a potential gap on Monday morning.

Silver daily TF


Silver 4h TF


Silver 15M TF


The reason I was stalking Silver is because on Thursday it made a reversal bar but that was not the price action bar I was looking for but I like the KEY rejection level. Friday would have to be the next daily candle to be looking ie, Today for Friday's bar to complete. On the 4h TF, you can also see Thursday there was a nice bearish engulf bar but I did not like the block price was trading into.

Anyway on the 15M TF, you can see the news candle initially took price higher but had a bearish wick. Bad US consumer number usually cause a USD selloff and buying of risk currencies or/and commodities generally speaking. The next 15M candle suck in the bulls through the KEY daily resistance, then forms that key rejection pin bar before slamming price down big time. Some will call this stop sweeping to clear out the bear stops of Thursday before the buying stops and bears took over. Who knows why it happens but it just look too obvious to be a natural price action in the course of bulls and bears exerting control especially at such key levels. The price randomness I was referring infer that the bad US news should cause a USD selloff but it did only very initially then the logic got left behind.

So you can see if I was trading this setup and I was looking for that MACD or MA crossover, I would be shorting when price has already moved much lower to short into. This is what I mean by "paying" for a late entry. Those that were looking at the bearish pin bar using that candle as risk would have made multiple RR ratio after the following 2 candles and be out on a very good trade.

 

[Joules MM1]

I am probably now discussing out of the realms of MACD but this is a price action I noticed from Friday's evening Oz time pre-US news on Consumer sentiment. I do not trade news nor have I found a profitable way to do so but this is what I have found as the price action revealed. Also I do not take trades even 15m chart on a Friday evening leading into the weekend with a potential gap on Monday morning.



The reason I was stalking Silver is because on Thursday it made a reversal bar but that was not the price action bar I was looking for but I like the KEY rejection level. Friday would have to be the next daily candle to be looking ie, Today for Friday's bar to complete. On the 4h TF, you can also see Thursday there was a nice bearish engulf bar but I did not like the block price was trading into.

Anyway on the 15M TF, you can see the news candle initially took price higher but had a bearish wick. Bad US consumer number usually cause a USD selloff and buying of risk currencies or/and commodities generally speaking. The next 15M candle suck in the bulls through the KEY daily resistance, then forms that key rejection pin bar before slamming price down big time. Some will call this stop sweeping to clear out the bear stops of Thursday before the buying stops and bears took over. Who knows why it happens but it just look too obvious to be a natural price action in the course of bulls and bears exerting control especially at such key levels. The price randomness I was referring infer that the bad US news should cause a USD selloff but it did only very initially then the logic got left behind.

So you can see if I was trading this setup and I was looking for that MACD or MA crossover, I would be shorting when price has already moved much lower to short into. This is what I mean by "paying" for a late entry. Those that were looking at the bearish pin bar using that candle as risk would have made multiple RR ratio after the following 2 candles and be out on a very good trade.

thanks, AJ
good post

....completely agree on the cost aspect in terms of time and obviously price length plus

traders who use these lags, you still have to decide if youre going to trigger in or out (all 4 executions considered) and of course there's contradiction that while there's lag there's subtle nuances that can give a heads up but it can lead to emotive logic because the lag makes you into a witness and traders naturally protect their opinion once it is formed (I call this knowing your own context)
which leads to false positives and false negatives (both sides of the bias, meaning that if youre already leaning to STO or leaning to BTO or leaning to STC or BTC) then a subtle action can unconsciously lead you to take signals that are part of the construct of the lag but not part of the construct of the traders activity (price) meaning that you'll obey signals to satisfy your discipline while ignoring your implicit que to take alternative action or vice versa you'll pre-empt the lag and take the wrong action....

kinda using different language with this

on how anyone may think that the construct of a laggard is equal to the construct of price...that means even tho you consciously know the lag is lagging you dont implicitly understand that it is a stand-alone indicia.....your thinking is stand-alone. it is seperate from price, whereas, lags are modulated of/from price or volume.....so there is value in lags but that value is filtered thru you as the trader which is why they work so well in trends because the trends simply run over false or negative positives and rescue the position....like a jockey dismounting every 100 meters, still finishing the race and if all jockeys did the same thing a race maybe won but if you say to yourself no dismounting let's just keep riding youre odds of NOT losing climb (let's just concentrate on price alone and converse only about price not its derivative)

thanks for the summation of the action in silver.... lower time frames, how are you using those for entry/exits?.....15 min bars are mighty big time frames from this type of approach....

 

[AverageJoe]

thanks for the summation of the action in silver.... lower time frames, how are you using those for entry/exits?.....15 min bars are mighty big time frames from this type of approach....

I don't use 15M charts because the noises makes it difficult to enter after having to do the analysis on risk reward etc... It can be done obviously but I chose not to use this time frame.

My entry TF is usually the 1H (rarely) upwards to 4h, 8H(very ocassionally) and daily.

Exits are RRR analysis coupled with support or resistance levels and candle action of the past. I am not a scalper so less is more personally speaking.

I have a mechanical style system that trades Cable specifically between Frankfurt/London Open but that one does not use candlestick PA. Purely counter momentum and price and time zone analysis. Trade management is scaling and the idea is to catch as many pips withing one swing or at London close. All risk reward ratio and does not look at news. If I catch a pending order trade it is usually over within a couple of hours at most or if stuck in a trade the aggressive scaling trade management trail the exits usually but occasionally close out at London close. The DNA of this system came from ICT (Inner Circle Trader). I found him and his method of trading through babypips where he used to post under ICT now Michael Huddleston.

Here is a sample of his weekly review form lastweek, https://www.youtube.com/watch?v=FCABGDw6WjA&feature=youtu.be&a

Note, I got the main idea from his teachings and pick stuff I could incorporate into my style. For someone who teaches them for free and have no interest signing up paid members, you can't get better than this. He has his critics in babypips and I suspect those that blindly follows him on his discretionary system and expect an ATM machine will be duly disappointed!

Enjoy the video. I learned a lot from his analysis and what he looks for. Having said that, his stuff are non retail thinking and you will see how he approached the trades. Enough of promoting him since it is all free and you decide for yourself if there is value.