steve46

Hello As regards the frequency of trending "days", I think we can say the following. One would think that trend days are in the minority. On an intraday basis, this may be true. If however you look at a daily chart, one can see that trending days appear in clusters. Think about what that might mean to you if you trade intraday. My priority is to learn to handle variation in the day to day action, so that I can catch as many "runners" as possible. I define runners as trades that capture more than 10 points. Now if you want, you certainly can backtest (I prefer "characterizing" the market but that is up to you) and if you are observant you can develop ideas (rules) that help you anticipate trend. Personally I like to work with Market Profile, because it "tells me" based on "day type" when a trend day is likely. Now I am somewhat restricted in what I am willing to say about that in this forum, but I would suggest that you will benefit from reading about "day types" in Dalton's book "Mind Over Markets". Starting on page 19 of that text one can learn for instance about the importance of the "Initial Balance". Dalton suggests that a narrow initial balance tends to be easy to overturn, resulting in range extension and by definition a trending day. In contrast a wide initial balance might suggest a market that is going to auction back and forth. Having said that..I refer you to my posted method for scaling out of trades. If you were to forego all that backtesting and simply embrace the idea of finding favorable trade position early in the morning, you'd make money on the first 10 points AND you would have additional contracts left in case the market continued in your direction. Also you'd be assured of obtaining profit on both trend and non-trend days. As I have mentioned before, my own P&L improved significantly when I adopted that approach. In other words instead of backtesting with the goal of anticipating trend, I backtested (and this time the word "backtest" is accurate) to determine whether my position sizing and risk management program were efficient at producing profit in both trendy and choppy environments. That is why I adopted the scale out method that I posted. One way to look at it, is that if you trade the S&P market, I already did the backtest for you...(although it was done years ago and frankly I don't think I have the original results anymore). I hope my answer helps. I realize I went off on a tangent here, but what I am trying to do is save you considerable time and effort. Please let me know if my approach to your question "works" for you. Steve

Yes it is that simple...If you have a successful trading plan...just follow your rules.....point & click..... Of course there are other "simple" approaches. As an example my father was a Navy pilot..his preferred "simple" approach was to stand a few inches from my face and yell "snap out of it son....on the count of three you WILL "xxxxxxx" (substitute any instruction you wish right here)!!!" This is can be a very effective approach as it quickly weeds out those who don't have the right stuff. Also it is a very simple pass/fail approach that when successful teaches the student to deal effectively with stress. There you go...simple and free.

Yes Jonbig, if you are talking about Anek I agree, he seems a good enough fellow. Unfortunately he is not available to just anyone off the street. In your comment you fail to make that understood....giving readers the impression that this alternative exists for them as well. Perhaps it does, but in my experience it is extremely unusual.

I agree with Sevensa. Perhaps you might want to start by taking an inventory of "assets" that relate to your chosen field. For instance, do you have any formal education in finance or in some subject that relates to the markets...Do you have a basic understanding of how markets work. Do you have any technical skills..for example are you computer literate...do you know how to use a spreadsheet Once you have completed a mental inventory of your assets and liabilities, you should have some idea of where to start your journey.

Well one can't fault you for trying to economize on this element of your development, however I doubt that any highly successful professional will be willing to spend much time with you (not impossible but I believe highly improbable). My suggested solution is posted in your other thread. I suggest you approach this in a businesslike manner and find a skilled professional to help you on an hourly fee basis. Depending on your level of motivation, I think you may realize your goals sooner, or at the very least you will end up with a good understanding of what might be holding you back. Good luck Steve

The title of the thread leaves me to believe that the poster lacks an in-depth understanding of his own psyche. Further it seems he may be facing the same challenges we've all had to overcome when trying to integrate ourselves into a very competitive situation (like trading for instance). Assuming that he/she has overcome all the technical obstacles and has only to master the mental aspect of trading, then I suggest going to a skilled professional working in that specialty. The best I know of are folks like Mark Douglas, Dr. Brett Steenbarger, Dr. Ari Kiev. Of those three I have had some contact with Dr. Steenbarger and Dr. Kiev. My intuition (and it is only that) is that the original poster might get maximum benefit from Dr. Kiev (if he could afford him) and more realistically might want to start by reading books from any of the three. Another idea that might prove valuable is to look into NLP (NeuroLinguistic Programming). I have seen some benefit from that approach in my own office. Unfortunately I have no current reference at this time for a good consultant in that field. The gentleman who used to provide service to my office is deceased. I hope some of this proves helpful. Best Regards Steve

I happen to live near a gentleman who is a mental health professional. Skilled man, medical school, author, lots of experience. I remember a comment of his that relates to this subject. Basically he said that people are complex, their motivations only partly knowable to the rest of us...we want to believe good things about our neighbors and in most respects we can, knowing we share a common ground of values. As regards our talents and our capacities, people have enormous capacity for change if they are properly motivated. If there is a limiting factor it is that same capacity for complacense, to be satisfied with who we are right now....and to look no further....left alone with our complacent attitudes, as we age it becomes more difficult to change or adopt new behaviors. We are what we are at that point and only with extreme effort or in response to dramatic outside forces (war, illness, personal loss) can we change our behaviors. Over a period of years I have taught several people to trade successfully. Also I have tried to teach a few unsuccessfully. In one or two instances our lack of success is probably due to the inability to find a common ground, a way to relate. The money issue is really about motivation more than anything else. I notice that people don't really pay attention....and aren't really motivated to make the effort necessary to learn....unless they have paid a significant price for the education they are trying to get... From experience I can say that there are three things that need to happen to create a successful teacher student relationship 1. The student needs to be fully motivated, probably by paying a significant fee for the education 2. The teacher needs to be a person of good will, who has the capacity and the willingness to teach effectively 3. The student needs to feel they are making consistent progress toward goals that have been established in advance by both parties. Now if you think about this, you can surely understand why it is so hard to obtain success in this field. All the comments about verifying that a teacher is successful...blah blah blah..is crap...none of it matters...a teacher is a person who knows how and is willing to teach...a student is a person willing to do the hard work of learning and changing their behavior....and frankly it is a matter of luck that they find each other. and I wish you the best of luck if that is what you are looking for Steve

Hello Minoo I'm sorry to be replying so late...generally speaking I don't have time to post during trading hours. My ability to predict isn't that great so I will refer you to those who are better at it.....I simply react to what the market decides to do on a daily basis. Personally I would not be in either of the issues that you mentioned. For me, I learned that the best way is to make money and buy good quality bonds with it. I own a lot of (old) treasury bonds and notes. So far that has worked for me. The one thing that I did do long ago is buy inflation protected "Tips" when they first came out. I always look hard at new issues because they tend to be mispriced by the issuer and that was true in this case as well. They aren't that good a deal now, especially since we look to be heading toward disinflationary times (prices going lower). Also as mentioned in a previous post, I had "extra" money and went into the market to buy distressed equities during the last several weeks. I may take a beating or I may make money on it. All I can tell you is that I now own a lot of good companies at bargain prices. I bought a lot of Citi today for instance. Now we will see if this administration can get us out of trouble. The best of luck to you Steve

Clearly there are many manifestations of cyclic behavior in the markets. The most obvious are those that are the result of simple human behavior. For instance, one can observe specific changes in volume and price movement every day from just before noon until about 1:30 EST. Other examples include the timing of margin calls, events such as earnings, bond auctions and FOMC meetings all have a cyclic nature. Important Tax deadlines and other events (so called "window dressing" dates) are predictable and cyclic in nature. If you spend any time in an open outcry pit, you can see the cyclical nature of the open every day as retail trades enter the market on open, then the locals move in to absorb that paper and mark the market up or down in response. As one might predict, those same locals almost always go too far in a given direction, and are caught with their hands in the cookie jar when institutions come in to buy or sell. One after another, first the weak hands, then the less skilled locals puke their positions while the smart money takes the market where they want it. All of it is cyclical in nature and contributes to the feeling that markets exhibit a very tidal nature. After all this time, I really don't give it much thought. I just accept it as a part of the game. Good luck everyone Steve

Yes I did notice your post. what I find interesting is that there are folks who use some of these approaches (astrology for instance) who for reasons I cannot fathom are really good traders. For instance there's a guy in Australia who uses Gann numbers and Astrology and I have seen him really hit it out of the park. I have no idea how he does it, except to say that he has a very good feel for market action. Just one of the ongoing mysteries of the universe I guess. Good luck in the Markets Steve

I think Astrology is the most "far out" aspect of trading. That is why Gann got such a freaky rep. I am told that near the end of his life Gann decided to cover his body with geometric tatoos that he used to forecast trades. Lets, see oh yeah there was Joe Granville who thought he could trade by forecasting the low frequency waves that caused earthquakes. Then there's General George McClellan, inventor of the "McClellan Oscillator". McClellan was a confederate general and early riser who liked to stand in front of his tent in his skivvies playing "Battle Hymn of the Republic" on his bugle, all the while discharging his revolver at passing birds. Finally, If I remember correctly, Wells Wilder used to eat psychedelic mushrooms, and then stand naked in the forest with his index finger just touching the top of his head. He would turn seven times and without opening his eyes, walk ten steps forward. If he hit a tree he would short the market that day. If he hit nothing he would go long at the open. I once had a discussion with Dick Cheney on this subject. He seemed to have a real interest in General McClellan, saying that one day he too wanted to try playing the bugle while discharging weapons randomly. I hope this helps. Steve

Well here we are some short distance after the election and the markets are getting ready to test the lows set in '02 and March of '03 I have several charts the first of which is a monthly showing a history of the S&P over a 10 year period. You can see the cyclic nature of this market as well as the secular (bear) trend we are in now. The next chart displays 570 minute candles, and here you can see a nice short signal early in October at 988. Based on these two charts alone, a newbie would have done well trading the short side exclusively. That is the "Idea" that I am presenting for this post. If you are a newbie and you have a small account, not much experience....and so on....you would do well to concentrate on the short side and try to build both your account and your confidence.

I wonder folks, if you (any of you) have an understanding of the practical context of VWAP? I think I understand (now) the basis for the use of it in Jerry's system, however the way "the VWAP" affects trading could perhaps be important depending on what you are trying to do (your time frame, your market bias long or short, and your position sizing). For those who may not know, VWAP is used as a bogey for institutions who generally speaking are trading size (blocks from 25k on up). These institutions execute both in the market (you see them on your DOM) and out of market (in the liquidity pools, and premarket in response to "indications of interest" communicated between principals). Depending on the bias long or short, the party executing the transaction is trying to get it done either above or below the average for that time frame. In most all cases the firm executing is a third party who has to report whether they had success hitting that bogey (target) or not. This is important to them, because often the transaction is only part of a larger piece of business that needs to be done over an extended time frame. If the executing firm has success hitting that target (or bettering it) they may often "win the order" to execute the rest of the position. If for example they are not successful in executing at the VWAP, they probably won't see any more business from that order. So, on a given day, what matters is whether institutions and size players are trying to get long or short (trying to execute at, above or below the VWAP). As with most things in life, it isn't black or white, so what matters is what the majority of players are doing, by chance or by design. So what I am thinking is this....on a given day, if a majority of players are SELLING inventory, they are going to be trying to execute at or above the VWAP, and your systematic approach should probably be "tuned" to that reality If on the other hand, the majority of players are BUYING inventory, people trading this particular systematic approach are going to want to tweak it to the other side a bit. Now, I do this myself, and it doesn't require that you trade using Jerry's exact approach. It simply means that you keep in mind that there is likely to be a tendency for size to transact on one side or the other of the VWAP, and the reality is that programmed execution is going to be coming in on a timed basis, trying to execute size without moving the market (executing in pieces). If your market is an open outcry market, they are looking for evidence that players are coming back with more to business to do. Once they see that, well thats part of what causes markets to trend. if you have a way to determine this early in the session, you have a significant edge. Hope this helps a little bit Steve

In markets that can be characterized as reverting to a mean, scaling in and out could work. The problem traders must overcome is that when you are wrong and price continues to trend against your position, your losses can quickly become significant. Since retail traders often have insufficient capital to begin with, unless you have a strong mathematical advantage, one or two strong moves against you will probably take you out of the game.

Sure, I understand completely...if you don't mind I would like you to delete my posts in this thread. Thanks, Steve

I think diversity of opinion is a good thing. Thats what makes horse races so interesting. In my opinion, the limiting factor as regards Wyckoffs approach is that today's markets have changed, not only in terms of volume levels but as to how that volume is delivered, processed and displayed to the public. In addition, it seems to me, that the tools of the trade have changed as well as the skill levels of participants. Today's markets are much different than Wyckoff could have imagined. As regards the use of MonteCarlo engines, I think its no different than learning to use a circular saw instead of a hand saw. Its readily available and because I can make use of it quickly, I can obtain an advantage over those less skilled. I feel obligated to tell you that these tools exist, in the same way that I would let you know that an elevator can be used instead of taking the stairs. Certainly its up to you to decide which form of transportation serves you best. Good luck Steve

I rarely mention this anymore, but really one should have gone through a market characterization process prior to deciding on a plan to scale (or not). Nobody seems to want to start "at the beginning".... I find that unless I am paying someone (working in my office) to do this, it doesn't get done. And its too bad, because with enough time into the process traders usually find that it gives them more confidence to hold a position (thus their PnL is more likely to match their projections). Its like trying to get little kids to brush their teeth (lol). All I can say is "learn to use a Monte Carlo engine" and you will never regret the time it took to learn. Learn to characterize a market and you will never again be involved in a "traditional" backtest. and to anticipate the inevitable questions 1.)I use @Risk (Palisade Software) and 2.) A simple Excel spreadsheet. As with all things it ain't about the tools, its how you learn to use them (your skill set). For anyone who take the trouble to actually go out an get the software, you then need some basic background. "Simulation Modeling using @Risk" by Wayne Winston is one way to go...Chapter 16 shows modeling equities, and chapters 17-19 deal with path dependent options, interest rate risk and hedging with futures. So ultimately, scale out or not depends on what you want to accomplish and what compromises you are willing to make. Frankly if I were a newbie or a trader with a small account, I would scale all in on the entry and scale out incrementally in most index futures markets. For any equities markets I would research (characterize) the behavior of the specific issue. Same for currencies although they generally have a greater tendency to trend. Finally if there are any newbie ags traders (soft, meats, grains) I would definitely scale out no question. Energy (scale out), metals (scale out) I believe thats about all I can say from experience. By the way it wouldn't hurt for newbies to get a copy of "Mathematics of Technical Analysis" by Clifford Sherry. It shows a couple of simple ways to characterize price action (market action).... Hope it helps (now go get that Monte Carlo software. It ain't cheap so ask if they still have a student version that you can use for free)..... Steve

Generally speaking I like to pay myself first (or as soon as possible) when trading. For me, that is the main "attraction" of scaling out mechanically. Its true that I ocasionally override my system and hold scaling out at different intervals, but I never fail to get paid (something, even a little bit). The other side of this is simply my experience. Once I added the extra "bullets" and got used to leaving them in the market to catch the outlier trades, my end of year balance sheet started to show improvement. I believe that more or better planning is probably not the remedy for those who have problems staying in a trade. For some reason, some folks have emotional issues that prevent or at the very least, make it more difficult for them to endure the tension of not knowing whether price will move in their favor. I have seen this repeatedly, watching as they fidget and tick watch and ask (me) whether they should get out now (lol).... One thing that may help traders who are experiencing this problem, is to be more involved in their research of a trade setup. For obvious reasons, if one knows in great detail what to expect from a trade, what the average profit should be, what the average loss should be and the percentage success (over a significant sample size), it may reduce the stress level enough for them to stop tick watching and let the trade run its course. Just a couple of thoughts Steve

Well as regards DBs thoughtful comment, I agree. So I would add that it is likely that new, inexperienced or struggling traders will not possess the maturity or judgement necessary to know when a trade is "over"....... That is why I suggest scaling out as outlined in post 48 of my thread "Ideas for Struggling Traders"....One of the virtues of that method is that you don't have to know whether the trade is finished or has more room to run. You simply scale out at fixed intervals (mechanically), always leaving some bullets just in case it runs on....Assuming a daytrade horizon, one certainly does have to make a decision at some point, but that point can be at the very end of the day if necessary. Of course the best way to determine this is to test or characterize your markets, but I leave that up to each individual's discretion. That simplified outline shows a scale out plan for 12 contracts in the ES market, but it could be adapted in a number of ways. As regards Kiwi's thoughtful comment I agree again. Over the years I have done numerous tests of trailing stop systems. All of them have a cost associated with use, and that cost is always the long term profitability of the system. Over that time, what has seems to be true is that one has to try to catch as many "outliers" (unusually profitable trades) as possible to overcome both expenses and unforseen negative scenarios. Now if one is participating in the equities markets (US Markets), I think it can be said that the best way catch these outlier trades is to maintain a residual presence in your market of choice for a long a possible during RTHs. On the other hand in mean reverting markets (US indices for example) one would need some way of identifying trend days early in the session and THEN it would seem prudent to maintain a residual presence there. For most other sessions, what would work best is to develop a way to estimate "maximum favorable excursion" and try to capture that movement on a consistent basis. As always, success in these endeavors comes to those who have sufficient skills to test and/or experience. Finally it is true that all the planning in the world amounts to naught if one cannot execute. Apparently this is a real problem for many struggling traders. Interestingly in professional offices where traders are working with OPM this isn't often a problem (at least I have not observed it to be a problem), but when you add inexperience and let people trade their own money, boom they become "scared" traders, and as the saying goes "scared money never wins".... Steve

Entries and exits are a matter of getting "in synch" with market action. In order to do that one has to understand that the larger market is "moved" by institutions and players trading size. On an intraday (short term) basis, participants target specific price points and they think in terms of 10, 20, 30 and 40 pt "moves" or "pieces". On the longer term, institutional participants and a much larger pool of players (including retail investors) are looking for moves based on tax consequences (long term vs. short term capital gains if US based). These longer term players enter at points that they define as having "value" ("value" meaning having potential to increase in value over a time frame that extends from months to years) If you understand this, you can see where you fit in the larger financial picture of the markets. Risk management is often left out of the equation when it comes to entries. In truth, entries are affected by local volatility and noise levels. Short term participants usually find that they have to maintain larger stop losses in order to maintain a presence long enough for their edge to kick in. Generally speaking, the majority of retail traders fail in their efforts because they A. do not have an edge, or B. have an account that is insufficiently funded to last through drawdowns, and/or C. Do not keep a realistic stop loss in place. Entry Skills Retail traders often complain about choppy market conditions. Based on observation one can see that markets move from trend to chop in a cyclic fashion. Those cycles can be seen on a weekly and monthly basis if one is observant. One basic difference between retail and profesionals is their choice of entry. Retail tends to trade "in the middle" of price moves hoping to get a small piece of the action, while professionals look to identify the origins and end points of price moves (trading from the "outside...in".....) Without a context to refer to, this is difficult to see, however one can get a glimpse of it using Market Profile for instance. In that context one can see participants move into and out of the market at specific areas thought to have fair or unfair "value". The auction premise (the idea that value is determined by the auction process) seems to be one way of determining these price points no matter what market a participant chooses. Understanding why participants enter and exit markets, a short term trader has only to learn some basic recognition skills. For example When markets open out of value (below value for instance), the tendency is for participants to move the market up to test the low end of a previous value area. At the S&P pit, locals take in the opening orders from retail and depending on the volume, they try to move the market to a test point. If no "paper" (size) comes in to move the market past that point (this is called a "peekaboo"), they assume no demand is present and the market moves back down. As volume dries up, institutional "paper" participants, funds, banks, hedgers and others jump on (enter) to mark it down. To see this one can look at time/price displays, MarketDelta displays, Market Squawk, and of course you can "see" this as it develops on the charts. If you maintain a Market Profile chart with previous value areas marked you can see price test that area and either continue up ("take out" that price point) or fail and fall back. As with all things, there is a rythym to this movement and with screen time one can see it first and learn to anticipate the proper entry point. I'll stop at this point and see if there is interest in further comment.

Analysis of volume is best done "on the job" sitting next to someone who knows what to point out to you...Absent that I suggest you look for tools that will allow you to see how volume fluctuates at critical points in a chart. If there is interest I can point out some of these tools later..... Not knowing what time frame you prefer I will simply talk about intraday trading. Intraday Tops and Bottoms You can learn some of this by simply looking at intraday charts. Generally speaking as an intraday market swings up/down, you will see volume ramping up/down. Look at the attached chart and see what I mean. Start with the open....Generally the first few bars are retail orders filling and imbalances resolving from the previous day. On this day, you see what we will characterize as "noise" which means you have a choppy market auctioning up and down (orders both ways). Looking at the price action however you can see that "locals" are trying to mark it down (take it down to where they were short the previous day). In the next chart you see the previous day's close (and you can see how the market closed down) which is usually the target that locals are looking to test. Now refer back to the first chart and you can see how volume ramps down and at the end of each "ramp" you have a spike of "volume". We will characterize this as an "exhaustion spike". Think of the market as though it were a living breathing organism. The up and down "ramps" are like the market breathimg in and out. The spikes mark the end of each "breath" Check out the volume I have marked at the top of each spike...For the market you trade you should know what type of volume is characteristic of an "exhaustion spike". This lets you know that you may expect a change in trend at these points The other important item that I will mention is the close.... Look at the big spike at the end of the day 15:55 EST.....This is when MOC orders start to come into the market. Some of them are programmed orders, others are traders looking to establish longer term positions. This can be important info for your analysis. I will let you take it from here. Good luck Steve

So what I would like to do now is to build a bit on one of my comments regarding MACD as it relates to the SPM thread. In that thread and in general usage, newbies often think (mistakenly) that the only signal is the "signal line" crossing the zero line. As they look into the subject a little more, they may find that there are a number of ways to obtain tradable signals from the MACD, some of which enable the trader to get a "second chance" to climb onto a good trade if thay missed the primary "Zero Line Cross" As I mentioned before, the primary signal occurs when the "signal line" crosses the "zero line" of the display. This component of the MACD is corellated to "trend"....if you miss that however you still have a second chance as the MACD line itself crosses the zero line. Because that line corellates with momentum, in a strong move, or in a volatile market, you can still get on here and perhaps make some money. If you look at the attached chart, you can see the where the signal line moves through the zero line. I have noted the time stamp so readers can see it on their own charts. Notice the initial move at 15:12 EST and then the followup at 15:18 EST The second chart shows an alternative entry using a 729V chart. Again you can see both the primary entry and the secondary. If you chose to enter after a retest of the EMA (as I prefer) psychologically it is easier to get on board. Steve

Once again sir and for the last time I will decide where and when I post. As I understand it, you have been given direction by the gentleman who owns the business. I suggest you get your personal issues under control so that we can move forward.

I think I am being very patient with you sir Your comment is simply wrong The basis of the thread and I have read it, is a MACD crossover system. Yes there is a displaced 3 period Simple moving average, also from a related thread by the same original author, there is a 9 period moving average that can be used. The person who started the thread states that both could be used to "re-enter" the position....(I encourage YOU to take a moment to read the text). Clearly the basis of the system is not either of these moving averages, but the MACD itself. Thanks Steve

Alright then, lets continue with my original opinion. First one should know that this comment relates generally to the use of MACD in its basic form (12, 26, 9) where the trader takes signals long or short when the "signal line" passes through the "zero line". First the obvious, the signals lag...if one simply looks at the price action you see that the signal occurs after a significant portion of the move has occurred. The implication is that with big volatility there is more "sustained movement" to come, but if volatility dries up, that movement is likely to be over (or almost over) by the time you get filled. This last week would have been about perfect for a MACD system. Second, the entry seems easy, but when you try it in real time, you see that it is not "cut & dried" for instance, as the signal line approaches the zero line it oscillates responding to the oscillation of price. As a result the signal line can closely approach the zero line and then get rejected. If you anticipated the move through and got long or short, you have a position on and you are starting on the wrong side (you better hope your stoploss is sized correctly). If you are right, well you are in a position and you have what I would characterize as "minimal trend" on your side (which is half of what you need for a successful outcome). Third, and this was not part of my original comment. This indicator has already been backtested by numerous third parties. Using standard settings (12,26,9) MACD does not test particularly well when used without filters. I think MACD can be adapted to provide a nice system. Here are some ideas that a trader could use to improve a basic MACD system. 1. You can vary the time frame on the chart. I suggest traders start with 1 minute and then step up 1 minute at a time taking note of the way that the signals "act" and as importantly, look at the how easy or difficult it is to visualize the entry. Do you have enough time to act, or do you feel hurried when the signal line approaches the zero line? How many false signals do you get? For newbies, I suggest you will find 1 minute charts hard to trade. One the other side, with 5 minute charts (especially with this volatility) you will see that you will need to set your stops at least 2.75 to 3 points wide. So you will want to find a compromise that works, giving you enough time to evaluate the signal without requiring too big a stoploss. Look at the length of the swings in the market you are trading. If 10 point swings are common you want to have a stoploss no greater than 2 to 2.5 points. 2. You can filter your signals. There are two primary elements of the MACD that tell the trader just how strong the signal is...one is the width (the distance between the signal line and the MACD line) between the lines, another is the slope or angle of the line as it passes through the zero line. The greater the distance between the signal line and the MACD line, the stronger the signal. The more acute the angle as the signal line passes through the zero line, the stronger the signal. Finally the MACD is composed of two lines for a reason. The "signal line" indicates the amount of trendiness, the "MACD" line indicates the amount of momentum. So to get the best odds of success, you want the signal line to pass through the zero line as close to vertical as possible and you want to see significant space between the signal line and the MACD line as it penetrates the zero line. My comments about confluence of multiple signals applies here as well. What should work well is using a relatively long EMA and taking signals when they correspond to a move up or down through the EMA. Pivots would work as well as marking out the opening range (I can talk more about that if there is continued interest). So my best advice is the same no matter what system you are evaluating. Look closely at the signal type, and the way it works. If like the MACD, the signal is comprised of both trend and momentum elements, you want to maximize both components. You want to minimize the amount of discretion you use and you want to have a suitable stop loss in place. You can do this by adding a filter (or filters) and/or taking signals based on "confluence". Steve