MACD + Histograms/Twiggs/ROC

[Rusty99 10]

I am a relative newcomer and I have been using a system which uses MACD crossovers + price/volume changes to search for stock. I then use a chart that includes MACD + histogram and Twiggs Money Flow + ROC to choose when to buy and sell. [Twiggs is a modified Chaikin Money Flow]. The signals are a simultaneous rise in Twiggs and ROC + a change in histogram trend (or MACD crossover) for Buy Signal and simultaneous Falls + change in histogram trend for the sell signal. (See chart) I would be interested in any comments you may have on this system. The MACD crossover is generally too late as a signal - hence the use of the histogram trend.

 

Multicollinearity is reduced with this system as:-

ROC(price) is a momentum indicator

MACD is a trend indicator

Twiggs Money Flow is a Volume Indicator

 

The system is not mechanical but requires interpretation using the top display.

 

I use a filter (MACD + Volume and Price changes) to select potential stocks and then use the display to narrow down the choice and further information to buy and sell. It is a short-term system (5 to 10 days or more).

 

[Blaiserboy 10]

perhaps change the macd to 7 10 5

 

and perhaps add a stochastic...... eg put stoch 7 3 3 and stoch 35 10 1 in the same lower chart

 

these two will support each other

[Rusty99 10]

Thanks for the reply - I'll try your suggestions

Cheers

[Blaiserboy 10]

I will attempt to post a chart showing what I find to be effective

[Rusty99 10]

I have had another look at stochastic and Slow stochastic, but they appear to give too many 'false signals' for swing trading, though the signals earlier earlier than MACD.

Cheers

[Rusty99 10]

I have had another look at stochastic and Slow stochastic, but they appear to give too many 'false signals' for swing trading, though the signals earlier earlier than MACD.

Cheers

 

My followup research has confrmed that stochastic (various indices) produces more 'false signals' that cannot be distinguished from the main signals.

Cheers

[Blaiserboy 10]

The long stoch is to demonstrate trend, the fast stochastics will show entry points...... use two time frames, enter off the lower TF, using the close of the bar that takes out the bar before the high or low......

 

I think that if you play with this for a while you miss no retraces whatsoever, trade only with the trend.

[Rusty99 10]

......enter off the lower TF, using the close of the bar that takes out the bar before the high or low......

 

Sorry - can you please spell this out - it's unclear to me.

 

Thanks

[Blaiserboy 10]

This pic should clarify