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This period can be changed to represent a slower or faster moving average (i.e. If you want to learn more about the MACD stock indicator formula, check out the early part of this blog post from Rayner over at. Thus, the MACD lines are represented as follows: 12-period EMA and 26-period EMA. Remember, the lines are exponential moving averages and thus will have a greater reaction to the most recent price movement, unlike the simple moving average (SMA). It is important to mention many traders confuse the two lines in the indicator with simple moving averages. The default values for the indicator are 12,26,9. It consists of two exponential moving averages and a histogram. The moving average convergence divergence calculation is a lagging indicator used to follow trends. With that aside, let’s dig into the content.Ĭhapter 1: What is the MACD Stock Indicator? In order for the trading community to take you seriously, these are the sorts of things we have to get right off the bat! The more popular option is to say “MAC-D”. The first is by spelling out each letter by saying M – A – C – D. There are two ways you can pronounce MACD. In this tutorial, we will cover 5 trading strategies using the indicator and how you can implement these methodologies within your own trading system.īeyond the strategies, we will explore if the MACD stock indicator is appropriate for day trading and how well the MACD stock indicator stacks up against moving averages. Plot slowMA2 = MovingAverage(averageTypeSlow2, close, slowMALength2) ĪddOrder(OrderType.Buy_To_Open, (longEntries) and (upperMAp crosses below close or (fastma2 > slowMA2 and upperMAp ADX() and ADX() > myADX_Threshold) and MACD() > MACD(), CLOSE) ĪddOrder(OrderType.Sell_To_Close,fastMA2 crosses below slowMA2 or ADX() crosses below myADX_Threshold, CLOSE) ĪddOrder(OrderType.Buy_To_Open, (longEntries) and (upperMAp crosses below close or (fastma2 > slowMA2 and upperMAp ADX() and ADX() > myADX_Threshold) and MACD() > MACD(), OPEN) ĪddOrder(OrderType.Are you an indicator trader? If yes, then you will enjoy this comprehensive guide to one of the most widely used technical trading tools – the moving average convergence divergence (MACD). Plot fastMA2 = MovingAverage(averageTypeFast2, close, fastMALength2) Plot lowerMAp = MovingAverage(averageTypeLower, LowerMA, LowerMALength)
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Plot upperMAp = MovingAverage(averageTypeUpper, UpperMA, UpperMALength) Input averageTypeSlow2 = AverageType.Exponential Input averageTypeFast2 = AverageType.Exponential
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Input averageTypeLower = AverageType.Exponential Input averageTypeUpper = AverageType.Exponential # Adjust the values for different inputs for different stocks for best results # Exit at open on next day when EMA 5 crosses below EMA 15 or ADX() crosses below Threshold # Enter at open on next day when Close crosses above 50 SMA OR (EMA 5 above EMA 15 and Close > SMA 50) AND ADX() > ADX() and ADX() > Threshold currently set at and MACD() > MACD() # Strategy description: Enter only when direction & momentum are right. Ideally would like to convert this into a strategy backtest with, for example, Take profit & Stop loss on 1% move on 10 min period. I would like to see a summary statement where the above is true (UP arrow on chart) in the past & see if it works in multiple timeframes. BollingerBands("num dev dn" = -0.75, "num dev up" = 0.75)."UpperBand" crosses below close MovAvgExponential("length" = 5)."AvgExp" crosses above MovAvgExponential("length" = 21)."AvgExp"ġ0. MovAvgExponential("length" = 50)."AvgExp" crosses above MovAvgExponential("length" = 100)."AvgExp"ĩ. AwesomeOscillator()."AO" crosses above 2Ĩ. BollingerBands("num dev dn" = -0.75, "num dev up" = 0.75)."UpperBand" is less than or equal to closeĪND (At least one of the conditions must be true)ħ. MovAvgExponential("length" = 50)."AvgExp" is greater than MovAvgExponential("length" = 100)."AvgExp"ĥ. MovAvgExponential("length" = 5)."AvgExp" is greater than MovAvgExponential("length" = 21)."AvgExp"Ĥ. AwesomeOscillator()."AO" is greater than or equal to 2ģ. I would like to backtest these conditions over multiple time frames.