MACD + Histograms/Twiggs/ROC

Cartman said:

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

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I have not done formal testing – only looked at many many chart patters. The image shows what I am talking about. In the current volatile market I am looing at 5 day swing trades. The MACD cross over signals are shown as Blue Lines labelled “c”. You can see that if you wait for the cross over you enter the market too late to benefit from the rise. My but strategy is to look for major simultaneous up-turns (after a down-turn) in the Twiggs and ROC that corresponds with a change in a trend for the MACD histogram. This are marked with Green Lines and labelled “t”. The trend can be a decline after a peak or a crossing over of the zero line. Examples 2 and 3 are strong. For 1 I would probably have waited until the strong upturn corresponding with the cross-over. Example 4 is also weak. In less volatile markets you can afford to wait longer for the cross-over. There appears to be relatively few false cases where the three signals occurred simultaneously and the stock price fell, but the rise may be very short-lived. This system works for me – but I emphasise that I examine a lot of other information before deciding to buy. I use a trailing stop and/or a simultaneous fall in Twiggs and ROC and a change in MACD histogram trend as the sell signal. Why not set it up and do some testing and see how it goes? I’d love to get some feedback.

Rusty99 said:

Thanks for the replies.
I would like to know how to make it simpler.

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Rusty99 said:

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.)

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See, the problem is that you have already received feedback and you have ignored it. If your results are as good as claimed, why on earth would you want to change a thing? Just tighten up your risk management, read up on position sizing and you're done.

Rusty99 said:

I have not done formal testing – only looked at many many chart patters. Why not set it up and do some testing and see how it goes? I’d love to get some feedback.

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Rusty --- if it works for u thats all that matters ----- what yr showing is a counter trend system which means u have a much smaller window of opportunity to get yr entries and exits right ---- i also like C/T trades but if yr holding overnight for a few days, sooner or later yr gona get hit with a nasty gap open

short trades would have been less risky for most of the chart ----- lower lows/highs ---- until the last higher low ----- trend is now unclear --- of course none of that matters if yr familiar with the stock/instrument and how it behaves --

id personally be wary trading stocks long when the MACD is in negative territory even if it looks like crossing ---- risky business ---

wait for the MACD cross, and buy the low of the next cycle IF the low is higher than the previous low ---- much less risky cause yr punting with the trend ---- good luck with it

ps on this chart there would have been no long trades with the above scenario except maybe 4 --- but that was still risky cause we are still unsure whether the downtrend has reversed -- there were a cupla good shorts though!!

Rusty,
Could you give me some rational for your choice of indicators? Why twiggs, roc and macd? Have you looked at the bull power and bear power indicators, or other indicators?

It's Snake Pliskin said:

Rusty,
Could you give me some rational for your choice of indicators? Why twiggs, roc and macd? Have you looked at the bull power and bear power indicators, or other indicators?

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Thanks for your suggestion I’ll have another look at bull power and bear power indicators.

To state the obvious, after 3 years of research looking at all sorts of indictors the set I use works for the swing trading I am interested in. Basically what I am trying to do is hitch a ride on a price rise that has a reasonable chance of continuing long enough for me to make a profit. Twiggs Money Flow (Chaikin Money Flow) is based on detecting buying support, which is normally signalled by an increased volume and frequent closes in the top half of the daily range. ROC is a simple indicator of the relationship between the present price and the one that existed n-time periods ago. ROC increases when the price is trend up. MACD is a trend following indicator which signals the likely start and end of longer term price swing cycles. The system is used to pick stocks that appear to have entered a new upward trend cycle, with significant and sustained increases in BOTH price and volume. The indicators are relatively simple and easy to understand in relation to the basic stock data.

Cartman said:

id personally be wary trading stocks long when the MACD is in negative territory even if it looks like crossing ---- risky business ---

wait for the MACD cross, and buy the low of the next cycle IF the low is higher than the previous low ---- much less risky cause yr punting with the trend ---- good luck with it

ps on this chart there would have been no long trades with the above scenario except maybe 4 --- but that was still risky cause we are still unsure whether the downtrend has reversed -- there were a cupla good shorts though!!

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Thanks for the advice Cartman
The system is not mechanical and I carefully pick from a list of likely 'rides' using the chart pattern and other company information.
I am currently riding on number 4 !
It is a difficult times to rely on longer term trends! I agree this means higher risk with 'MACD in negative territory' and buying when 'the low is not higher than the previous low', but these are volatile times!
I'd rather stay trading despite the volatility if the system still works, than buy gold and wait 2 years.
Cheers - February should be interesting!

Rusty99 said:

Thanks for the advice Cartman
The system is not mechanical and I carefully pick from a list of likely 'rides' using the chart pattern and other company information.
I am currently riding on number 4 !

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nah not trying to give advice --- like i said if u know yr instrument there is no prob trading against the trend ----- its prob more the fact that u r holding for a few days (which is a long time in my world) ----- with C/T trading that adds a bit more risk ------ obviously yr choosy about yr stock picks, cause its working for u ----- if it aint broke etc ...