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MACD and Stochastic sucks???
Updated: Views / Replies:17,315 / 91
Created: by Lord Sidious Attachments:11

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MACD and Stochastic sucks???

  #11 (permalink)
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Lord Sidious View Post
Hey!


For the fourth time, trading YM, MACHHist, MACD lines and Stochastic (8,3,3), gave me sell signals very close to YM day high!!!!

Recently I lost money (more than I should have lost - I mean more than 2%) because of the same scenario. I also had situations were I made good money from pullbacks. My target uses to be the zone between day hight and the 61.8% fib point (about half "distance").

This time I lost about 1%, has Ive tighten my stops.

I sold 3 contracts (1€ per point)at 13310 (the days high had been reach at that time - 13312.5). I put my stop at 13322. In spite of the sell signals given from MACHHist, MACD lines and Stochastic, the price went up to 13340. What I think I did wrong: - in spite of the candles were high above 8 and 20 Ma at the time I sold, the slope of both pointed up...!


I confess I tend to look at MACHHist, MACD lines and Stochastic but also see the price action (wether if it seem to be going up or down). So, fellow traders, what am I doing wrong? Should I use other indicators for index future trading?

@Lord Sidious

When are you talking about ... today? Can you post the chart?

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #12 (permalink)
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NetTecture View Post
To add, btw. - after strong movements it is not that rare that the first sell signal does not work. THis is why trading is more than reading indicators. It may be an idea to mark this as a sell, then wait for a confirmation in price and a pullback to sell into.

In this case - strong movement - you definitely want some confirmation. Your indicators are toally in overextended territory where the forumulas break down, likely.

Btw., WHAT future to you sell? YM high is 13284 tpday for the June contract

I am now in a short for YM - with a quite tight stop. Short 13274 target 13244 but I likely pull out earlier. Trend is tereriorating per ADX (which is also visible in price action). Range so far is getting close to 3 (30.05 on ATR 14) which is not tradeable, and fsher 21 and 55 short a correction down from QUITE extreme levels (7.58 is my high on the 55 - that is rare and reflects that). Looks like that trade books a small profit. At least I cam close to move my stop to break even + 1.


My broker allows to trade the Dow index for 1 per point. Actually, when I say I trade YM, its inaccurate...

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  #13 (permalink)
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No, when you say "Futures" it is inaccurate, what you do is either CFD or spread betting, not trading futures.

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  #14 (permalink)
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In fact, as I see, from my records, the instrument Ive had more sucess was Light Crude...!

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  #15 (permalink)
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NetTecture View Post
No, when you say "Futures" it is inaccurate, what you do is either CFD or spread betting, not trading futures.

Yes, I trade CFD. Youre correct.

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  #16 (permalink)
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@Lord Sidious

When are you talking about ... today? Can you post the chart?


First time uploading charts. Lets hope everything works fine! My entry is represented by the red arrow symbol.

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  #17 (permalink)
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Yes, classical. After THAT move anything the stochastics fives you is total bullshit. Go some bars back it was NAILED to the top - totally overstretched. Basically I demand the stochastics to get back into reasonable area BEFORE (!) looking at it again. A drop under 80 does not mean "sell" here, it means "I am actually starting to measure something again".

THere is also this ruls of not trying to catch the extreme top of a strong trend day, and I am not sure what else than a strong trend day you would like this to be.

One filter that I very nicely use is EMA 5. Even with price action. Only enter when that has turned. You also want some non trivial price action confirmation after strong trents. Look at your short - it was pretty much still visually a strong uptrend, just a - ah - slowing one. Were you waiting for an inverse cup to form?

Basically this really was "ok, the stochastics got totally overstretched in a strong movement due to being unable to go over 100". And you were so nice to go in directly when basically there was no down movement but the push was fading out and the indicator started to show ANY value again

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  #18 (permalink)
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NetTecture View Post
Yes, classical. After THAT move anything the stochastics fives you is total bullshit. Go some bars back it was NAILED to the top - totally overstretched. Basically I demand the stochastics to get back into reasonable area BEFORE (!) looking at it again. A drop under 80 does not mean "sell" here, it means "I am actually starting to measure something again".

THere is also this ruls of not trying to catch the extreme top of a strong trend day, and I am not sure what else than a strong trend day you would like this to be.

One filter that I very nicely use is EMA 5. Even with price action. Only enter when that has turned. You also want some non trivial price action confirmation after strong trents. Look at your short - it was pretty much still visually a strong uptrend, just a - ah - slowing one. Were you waiting for an inverse cup to form?

Basically this really was "ok, the stochastics got totally overstretched in a strong movement due to being unable to go over 100". And you were so nice to go in directly when basically there was no down movement but the push was fading out and the indicator started to show ANY value again


Yes, but like I wrote, I dont pay attention only to Stochastics. As one can see, at the time I sold, we have stochastics overlsold, MACDHist near 0, MACD lines crossing, has the MACD Hist bars before created also a divergency with the price rising... The only thing wrong was the slope of the moving averages...

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  #19 (permalink)
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Lord Sidious View Post
Yes, but like I wrote, I dont pay attention only to Stochastics. As one can see, at the time I sold, we have stochastics overlsold, MACDHist near 0, MACD lines crossing, has the MACD Hist bars before created also a divergency with the price rising... The only thing wrong was the slope of the moving averages...

@Lord Sidious

Noooo ... the problem is ; You are treating the MACD and Stochastics as a mechanical trade system. They both crossed and you sold. Price was still above the "Fast" Moving average and the "fast" moving average was still above the "slow" moving average.

Indicators are not an absolute command. You have to take what you see in context with what they tell you.

Don't be like these guys....

Man Drowns Following GPS Instructions Into Lake

More Stories Of People Following GPS Blindly Into Dangerous Situations | Techdirt

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #20 (permalink)
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ThatManFromTexas View Post
@Lord Sidious

Noooo ... the problem is ; You are treating the MACD and Stochastics as a mechanical trade system. They both crossed and you sold. Price was still above the "Fast" Moving average and the "fast" moving average was still above the "slow" moving average.

Indicators are not an absolute command. You have to take what you see in context with what they tell you.

Don't be like these guys....

Man Drowns Following GPS Instructions Into Lake

More Stories Of People Following GPS Blindly Into Dangerous Situations | Techdirt

Understood!

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