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Craig_S
Posted : Friday, April 01, 2005 10:33:13 AM


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The basics of MACD and the MACD Histogram. How they are constructed and what they are designed to reveal.








If you prefer, you can download the video and watch it offline. Choose the Save option and save it to your hard drive. Extract the files to a location on your hard drive and double click on the .html file to launch the video. You must extract the files to your hard drive. You cannot play the video from the .zip file.


cross crossing moving average convergence divergence MACD

- Craig
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To view this video you must have Macromedia Flash Player and Microsoft Internet Explorer 5+
Craig_S
Posted : Friday, April 01, 2005 11:22:07 AM


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Here are the links to the Understanding Moving Averages Videos (Parts 1 & 2):

Understanding Moving Averages - Part I, The Basics
Understanding Moving Averages - Part II, Using Multiple Averages

Here are some PCF's for exponential MACD 20.40.30:

MACD Today
(XAVGC20-XAVGC40)

MACD Crossing Up Through Zero Today
(XAVGC20.1-XAVGC40.1)<0 AND (XAVGC20-XAVGC40)>0

MACD Crossing Down Through Zero Today
(XAVGC20.1-XAVGC40.1)>0 AND (XAVGC20-XAVGC40)<0

MACD Histogram Today
(XAVGC20-XAVGC40)-(XAVG(XAVGC30,20)-XAVG(XAVGC40,30))

MACD Histogram Crossing From Negative to Positive Today
(XAVGC20-XAVGC40)>(XAVG(XAVGC30,20)-XAVG(XAVGC40,30)) AND (XAVGC20.1-XAVGC40.1)<(XAVG(XAVGC30.1,20)-XAVG(XAVGC40.1,30))

MACD Histogram Crossing From Positive to Negative Today
(XAVGC20-XAVGC40)<(XAVG(XAVGC30,20)-XAVG(XAVGC40,30)) AND (XAVGC20.1-XAVGC40.1)>(XAVG(XAVGC30.1,20)-XAVG(XAVGC40.1,30))

- Craig
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chartist
Posted : Monday, April 04, 2005 12:51:14 PM
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Craig, I thoroughly enjoyed this presentation of MACD. I have used MACD as an indicator for years, without fully understanding the indicator. These educational videos are sincerely appreciated by those of us who are trying to make a living by chasing the elusive profits of the financial markets. The video format is far superior to the dry format of text only. DRD (David, the Money Show Texan with the $100 bill in his pocket!).
Craig_S
Posted : Monday, April 04, 2005 1:19:32 PM


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David! The Raffle King!

I'm glad you liked it. The entire idea of the Understanding series is to finally explain the indicators without any hype or promises.

I am working on Understanding Stochastics as we speak. Should have it up within 48 hours.

- Craig
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ella
Posted : Tuesday, April 05, 2005 9:50:32 AM
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Well done. Thank you.
Craig_S
Posted : Tuesday, April 05, 2005 10:06:30 AM


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Thank you for your kind words.

- Craig
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CapGain
Posted : Tuesday, April 05, 2005 5:42:56 PM
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This is the best explanation of how MACD is constructed that I have come across. I hope that I can use the new insight towards better trading.
Craig_S
Posted : Tuesday, April 05, 2005 7:02:36 PM


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Thank you for the kind words....

- Craig
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bknight
Posted : Thursday, April 07, 2005 9:12:04 AM
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I'm assuming (really bad idea) that you used 30 day moving average because it was in the middle of the 20 and 40 day periods?
Craig_S
Posted : Thursday, April 07, 2005 9:18:11 AM


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Nope... My choices for the settings for the video were just numbers that popped into my head. They are meaningless and are not settings I, or anyone, should use.

My hope is that after watching the video you will completely understand the nuts-and-bolts of MACD and what each setting means. From there you should enter settings that fit your trading and analysis style.

No logic used for the numbers in the video. Just numbers because I had to pick something.

- Craig
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cjaykay
Posted : Thursday, April 07, 2005 8:46:00 PM
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You have certainly cleared the fog on this baffling concept! Thanks.
Craig_S
Posted : Friday, April 08, 2005 3:30:48 AM


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That makes me VERY happy. It was the goal of this video!

- Craig
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anesthesia
Posted : Friday, April 08, 2005 11:03:27 AM
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How do you transfer pcf's to my computer?
Craig_S
Posted : Friday, April 08, 2005 11:15:39 AM


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You can drag and select the PCF in the post and hold down CTRL and press C to copy it then go to TeleChart and create a new PCF and in the formula box hold down CTRL and press V to paste it.

- Craig
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dmarkie
Posted : Sunday, April 10, 2005 7:43:59 PM
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Craig;
Nice presentation and thanks for the PCF's. Would you know what additions to the syntex would be required in order to view a MACD from a date prior to current day, say 5 day or 10 day previous from today? I would like to create a scan that compares today's MACD to a prevous date to determine the slope/change.

Thanks
Dave
Craig_S
Posted : Sunday, April 10, 2005 8:04:09 PM


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Glad you enjoyed it....

Here is everything but thrown back 10 days.

MACD 10 days ago
(XAVGC20.10-XAVGC40.10)

MACD Crossing Up Through Zero 10 days ago
(XAVGC20.11-XAVGC40.11)<0 AND (XAVGC20.10-XAVGC40.10)>0

MACD Crossing Down Through Zero 10 days ago
(XAVGC20.11-XAVGC40.11)>0 AND (XAVGC20.10-XAVGC40.10)<0

MACD Histogram 10 days ago
(XAVGC20.10-XAVGC40.10)-(XAVG(XAVGC30.10,20)-XAVG(XAVGC40.10,30))

MACD Histogram Crossing From Negative to Positive 10 days ago
(XAVGC20.10-XAVGC40.10)>(XAVG(XAVGC30.10,20)-XAVG(XAVGC40.10,30)) AND (XAVGC20.11-XAVGC40.11)<(XAVG(XAVGC30.11,20)-XAVG(XAVGC40.11,30))

MACD Histogram Crossing From Positive to Negative 10 days ago
(XAVGC20.10-XAVGC40.10)<(XAVG(XAVGC30.10,20)-XAVG(XAVGC40.10,30)) AND (XAVGC20.11-XAVGC40.11)>(XAVG(XAVGC30.11,20)-XAVG(XAVGC40.11,30))


- Craig
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awortman1
Posted : Tuesday, April 12, 2005 12:42:53 AM
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In this MACD video, the scale on the right side of the chart shows +.84 0 -.84. What do these numbers refer to?

Thanks.

Alan
Craig_S
Posted : Tuesday, April 12, 2005 9:07:49 AM


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They are the scale that the MACD is plotted on. The range of values for that MACD on that chart ran no more or less than those values.

- Craig
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CapGain
Posted : Wednesday, April 13, 2005 7:36:27 AM
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Craig -

Where is the video Understanding Stochastics that you said would be released a few days ago?
Craig_S
Posted : Wednesday, April 13, 2005 7:46:09 AM


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I made the video and we decided that it did not meet the quality standards set by the my other Understanding videos.

I went back to the drawing board and started from scratch.

I should have the new version written by the end of today and recorded/produced and posted by the end of the week.

Sorry for the delay but we will get a better video because of it.

- Craig
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george2
Posted : Wednesday, April 13, 2005 12:21:15 PM
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Craig,

Can you post the PCF for when the HISTOGRAM changes direction from below a certain point? Say a downward motion past -.25 or -.5 and then the histogram reverses and starts to go up.

I wrote it in another program. I am not familar enough with telechart yet to write it.

Here is how I wrote it before:

MACD(0) - MACDSignal(0) <= -.025 and MACD(0) - MACDSignal(0) >= MACD(-1) - MACDSignal(-1) and
MACD(-1) - MACDSignal(-1) <= MACD(-2) - MACDSignal(-2)

Thank You,
Geo....
Craig_S
Posted : Wednesday, April 13, 2005 1:39:23 PM


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What settings are you using for your MACD?

Sidenote: the .25 and .5 levels are most affected by the price of the stock, not the degree of seperation between MACD and its average (IMHO)

- Craig
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CapGain
Posted : Wednesday, April 13, 2005 4:37:06 PM
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Craig -

Thanks for responding to my question concerning the video for Understanding Stochastics. I look forward to viewing the video towards the end of the week.
george2
Posted : Wednesday, April 13, 2005 4:52:54 PM
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Craig,

Geo. here.

12-26-9 or faster. make it so I can change the perimeters at will.

thanks in advance...........
george2
Posted : Wednesday, April 13, 2005 4:55:46 PM
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The .25 or .50 lets me give MACD depth. I want the change to be deep.

geo........
Craig_S
Posted : Thursday, April 14, 2005 7:03:01 AM


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Here you go:

(((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))<=.25) AND ((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))>((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9))) AND ((XAVGC12.2-XAVGC26.2)-(XAVG(XAVGC12.2,9)-XAVG(XAVGC26.2,9)))<((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9)))



- Craig
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george2
Posted : Thursday, April 14, 2005 1:47:23 PM
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Thank You Craig,

Geo. Here....


I have just run the code. It shows the up slope of the histogram. I am looking to see todays slope has changed from yesterdays slope angle.
Example:
Two days ago Histogram was at -.45_ Yesterday Histogram was at -.47_ Today Histogram is at -.45. The Histogram looks like a V......

Thank You for all of you wonderfull effort. I know it took some time to write the above code.

Once Again THANK YOU!
geo........
Craig_S
Posted : Thursday, April 14, 2005 1:49:34 PM


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(((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))<=.25) AND ((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))>((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9))) AND ((XAVGC12.2-XAVGC26.2)-(XAVG(XAVGC12.2,9)-XAVG(XAVGC26.2,9)))>((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9)))


- Craig
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vyzwtc2000
Posted : Sunday, April 24, 2005 1:13:26 AM
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hi craig,

i looked at your formula for finding the slope of histogram. i tried it. it gives me stocks whose histogram is both in the positive and negative. if i just want the histogram in the negative, how shall i change the formula? I changed the 0.25 to -.25, the formula does not work. thanks. victoria
Craig_S
Posted : Monday, April 25, 2005 7:35:05 AM


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Do the settings of the PCF match the settings on your chart? Are you looking at a daily chart?

- Craig
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vyzwtc2000
Posted : Monday, April 25, 2005 8:49:40 PM
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Thanks, Craig. I checked. It is daily chart with the same 12, 26, 9 setting. It may be because you have 0.25 (positive) in the formula. Can you change it to negative 0.25? thanks. victoria
vyzwtc2000
Posted : Monday, April 25, 2005 8:57:28 PM
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Hi Craig,

I also notice some differences in your two formula below;

This is the formula posted on 4/10/05 above:

MACD Histogram Crossing From Positive to Negative 10 days ago
(XAVGC20.10-XAVGC40.10)<(XAVG(XAVGC30.10,20)-XAVG(XAVGC40.10,30)) AND (XAVGC20.11-XAVGC40.11)>(XAVG(XAVGC30.11,20)-XAVG(XAVGC40.11,30))


This is the formula posted on 4/14/05 above:


(((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))<=.25) AND ((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))>((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9))) AND ((XAVGC12.2-XAVGC26.2)-(XAVG(XAVGC12.2,9)-XAVG(XAVGC26.2,9)))>((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9)))

In your histogram calculation part, in your 20/40/30 example, you have 30.11 in the calculation. while in your 12/26/9 example, you used 12.1 and 26.1. My question is which order is right. I tried both. It gives me some difference in the numbers.

Please advise.
Thank you.
Victoria



Craig_S
Posted : Tuesday, April 26, 2005 1:23:21 AM


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The first is looking at the histogram now vs. 10 days ago. The second is looking at just the recent histogram.

.11 is eleven days ago

.1 is one day ago

Does that help? Look at the questions above each response to see they were looking for very different patterns.

- Craig
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ferike21
Posted : Tuesday, May 10, 2005 11:36:40 PM
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QUOTE (Craig_S)
(((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))&lt;=.25) AND ((XAVGC12-XAVGC26)-(XAVG(XAVGC12,9)-XAVG(XAVGC26,9)))&gt;((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9))) AND ((XAVGC12.2-XAVGC26.2)-(XAVG(XAVGC12.2,9)-XAVG(XAVGC26.2,9)))&gt;((XAVGC12.1-XAVGC26.1)-(XAVG(XAVGC12.1,9)-XAVG(XAVGC26.1,9)))


WHEN I PUT THIS IN IS SAYS ERROR IN FORMULASYNTAX CANYOU FIX THE PROBLEM THX FRANK
Bruce_L
Posted : Wednesday, May 11, 2005 8:45:08 AM


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I have copied and pasted the formula from Craig's original post and it does not produce an Error in Formula Syntax. Are you retyping the formula or using copy and paste?

If you are retyping the formula, please try to copy and paste the formula from Craig's original post.

-Bruce
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rwsmilie
Posted : Friday, May 13, 2005 12:45:30 PM
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The video (for MACD Histogram)doesn;'t load?
ellarr
Posted : Tuesday, May 31, 2005 3:01:50 PM
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Craig,

I think that I might be missing something with regards to the histogram formula. In your original post you stated the following for a 20,40,30 exponential.

MACD Today
(XAVGC20-XAVGC40)

MACD Histogram Today
(XAVGC20-XAVGC40)-(XAVG(XAVGC30,20)-XAVG(XAVGC40,30))

My understanding from your video is that the histogram is plotted by subtracting the MACD period moving average from the MACD. If my understanding is correct, the following formula represents the 30 day moving average of the MACD

XAVG(XAVGC30,20)-XAVG(XAVGC40,30)

When I plot the above formula it does not match up with the period plot from the MACD

1) Add a MACD 20,40,30 (Exponential - NOT plotted as histogram) to the middle pane
2) Add a custom formula 'XAVG(XAVGC30,20)-XAVG(XAVGC40,30)' (Center Zero Line) to the middle pane

The custom formula does not seem to match up with the period line from the MACD. As a second test, I performed the following steps

1) Add a MACD 20,40,30 (Exponential - Plotted as histogram) to the bottom pane
2) Add a custom formula '(XAVGC20-XAVGC40)-(XAVG(XAVGC30,20)-XAVG(XAVGC40,30))' (Center Zero Line) to the bottom pane

On this second test, the results appeared to be correct or at least within rounding error when I used IBM. However, when I jumped to SAPE, there was a marked difference between the MACD histogram and the formula.
Doug_H
Posted : Tuesday, May 31, 2005 3:21:25 PM


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ellarr:

If you check the Plot Using Price Scale box rather than the Center Zero Line box, the formula in your first example does indeed match the MACD period line exactly.

Give that a try and see if that solves the confusion.

- Doug
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ellarr
Posted : Tuesday, May 31, 2005 5:09:37 PM
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When I use Plot Using Price Scale, the formula line disappears.

At first I thought your statement was correct and that the MACD line covered the formula line. However, when I edit the MACD and uncheck the visible option, I don't see the formula line.
Doug_H
Posted : Tuesday, May 31, 2005 5:19:42 PM


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Right you are....my error! I should have checked that...but when I saw the line disappear, I assumed it was just superimposed by the MACD period line.

I will have to round up some others to look at this, because at this point, I don't know why the formula line does not match the MACD period line. Someone will post back to you here. Give me some time to investigate.

- Doug
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