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On Chart MACD Divergence Projection Idea... All You Need???
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On Chart MACD Divergence Projection Idea... All You Need???

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On Chart MACD Divergence Projection Idea... All You Need???

If you take a basic MACD indicator line (Avergage Line Optional) and place it on the main chart (Higher TF the Better) w Left Justification and use the left margin to scale the MACD line to the latest two major (another MACD for the minor if you can do two at once) Peeks/Dips you will see obvious divergence without a doubt.

Try it and see for yourself how truly more intuitive it really can be compared to eyeballling it from below as an indicator. It even projects! If you look left at price action to see of any consolidation simply compare it to the relative position of the MACD and you w easily know if the area will hold or not. Another option would be to incorporate a dot (change plot setting to dot) and/or instead of a line to show momentum! It will almost do it itself and only needs minor tweeking to match recent peeks/dips.

...Now, if some kind programmer out there sees this as worth while as I do I'd be very appreciative of an indicator that can do this automatically for us all.

Making trade analysis simple and obvious... Here's to grass roots ideas!!!!

I JUST INCLUDED THE TEMPLATE BELOW...

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Last edited by tdaman; May 25th, 2011 at 04:57 PM.
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  #3 (permalink)
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Would be great to have the option of combining several MACD lines representing the last 2 minor peeks/dips and last 2 major/peeks and dips.

Perhaps the definition of a peek and dip could be adjustable as well.

So as to eliminate unecessary chart clutter perhaps only the relavant info is shown... e.g. only show indication after recent turning point.

Also does interesting things when comparing the Zeroline directlly to price!

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See attached Template w line and dot to shjow divergence and momentum

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See attached Idea w Dot to show momentum.

THE KEY IS TO LINE UP PRICE (CLOSE) W THE MOST RECENT MACD DIPS/PEEKS...

When consolidation occurs it gets a bit confusing but following the above criteria seems to work as the MACD eventually shows the breakout direction.

Any suggestions???

Attached chart w turq BG is lined up w peek/dip on price (close).

Here's a template w MACD Bollinger Bands...

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Register to download File Type: xml MACD DIVERGENCE MACDBB.xml (22.7 KB, 30 views)

Last edited by tdaman; May 25th, 2011 at 08:08 PM.
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Just playing with this now and it seems like a great idea! For sure it makes divergences way more visible...

Thanks

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moving average as well as convergence/divergence is a lagging indicator. Thus, that's why it's more useful on larger TF charts....

Over longer TF's the markets/instruments make more sense and behave more predictably (especially in the rear view mirror).

However, for instruments like commodities, when increasing to larger TF charts, you also increase the range, which completely alters the P/L values you must undergo in order to take advantage.

As the old saying goes, you can't have your cake and eat it too.

This type of indicator/analysis on a large TF chart, with a LARGE capital account and the ability to undergo pretty significant intermittant swings, can do very well.

However, the other danger with larger TF charts is primary/fundamental shifts in the market. Larger TF charts move more slowly/methodically under fundamental neutral conditions, however, what looks to be consolidation/distribution or breakout/breakdown can be totally off when you throw in things like jobs reports, supply inventories, exhange rates, etc.

In the end, if the indicator works for you, great. The secret to finding a good working indicator is A) Finding the chart it works best on (TF), B) Finding the instrument that the chart/indicator combo works best on C) Finding the proper P/L ratio that works best for that particular chart/indicator/instrument combo.....and D) having the stones/discipline to trade that plan and E) Recognize the difference between "hang tough" and "change with the market."

You can achieve E) by simply simming constantly (even while you live trade) to stay on top of your "optimization" efforts, the rest is a lot of trial and error and forward/backward testing.

In summary, lagging indicators can work on slow moving, fairly predictable instruments on larger charts. Be wary about using them on shorter duration, highly volitile instruments unless you have brass balls and/or a large account.

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RM99 View Post
moving average as well as convergence/divergence is a lagging indicator. Thus, that's why it's more useful on larger TF charts....

Over longer TF's the markets/instruments make more sense and behave more predictably (especially in the rear view mirror).

However, for instruments like commodities, when increasing to larger TF charts, you also increase the range, which completely alters the P/L values you must undergo in order to take advantage.

As the old saying goes, you can't have your cake and eat it too.

This type of indicator/analysis on a large TF chart, with a LARGE capital account and the ability to undergo pretty significant intermittant swings, can do very well.

However, the other danger with larger TF charts is primary/fundamental shifts in the market. Larger TF charts move more slowly/methodically under fundamental neutral conditions, however, what looks to be consolidation/distribution or breakout/breakdown can be totally off when you throw in things like jobs reports, supply inventories, exhange rates, etc.

In the end, if the indicator works for you, great. The secret to finding a good working indicator is A) Finding the chart it works best on (TF), B) Finding the instrument that the chart/indicator combo works best on C) Finding the proper P/L ratio that works best for that particular chart/indicator/instrument combo.....and D) having the stones/discipline to trade that plan and E) Recognize the difference between "hang tough" and "change with the market."

You can achieve E) by simply simming constantly (even while you live trade) to stay on top of your "optimization" efforts, the rest is a lot of trial and error and forward/backward testing.

In summary, lagging indicators can work on slow moving, fairly predictable instruments on larger charts. Be wary about using them on shorter duration, highly volitile instruments unless you have brass balls and/or a large account.

I agree and appreciate your feedback. I've learned that higher TF divergence is more accurate. As for NEWS events effecting any of this I think it's always wise to indicate on your charts where such events occur... this certainly tells the whole story for your chart analysis!

I'd love to include more volume in telling the rest of the story if NT had the architecture to do so.

BTW, I've forwarded this same indicator idea to Investor RT. A platform I also use for Accumulative Delta!

Holy Grail... Volume and Price Delta!!!


Last edited by tdaman; May 26th, 2011 at 01:44 PM.
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