Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 Here to Help!
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Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 (XAVGC20XAVGC40)
MACD Crossing Up Through Zero Today (XAVGC20.1XAVGC40.1)<0 AND (XAVGC20XAVGC40)>0
MACD Crossing Down Through Zero Today (XAVGC20.1XAVGC40.1)>0 AND (XAVGC20XAVGC40)<0
MACD Histogram Today (XAVGC20XAVGC40)(XAVG(XAVGC30,20)XAVG(XAVGC40,30))
MACD Histogram Crossing From Negative to Positive Today (XAVGC20XAVGC40)>(XAVG(XAVGC30,20)XAVG(XAVGC40,30)) AND (XAVGC20.1XAVGC40.1)<(XAVG(XAVGC30.1,20)XAVG(XAVGC40.1,30))
MACD Histogram Crossing From Positive to Negative Today (XAVGC20XAVGC40)<(XAVG(XAVGC30,20)XAVG(XAVGC40,30)) AND (XAVGC20.1XAVGC40.1)>(XAVG(XAVGC30.1,20)XAVG(XAVGC40.1,30))
 Craig Here to Help!


Gold Customer
Joined: 12/21/2004 Posts: 2

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!).


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 Here to Help!


Registered User Joined: 12/30/2004 Posts: 6

Well done. Thank you.


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

Thank you for your kind words.
 Craig Here to Help!


Gold Customer
Joined: 10/7/2004 Posts: 111

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.


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

Thank you for the kind words....
 Craig Here to Help!


Gold Customer
Joined: 12/19/2004 Posts: 415

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?


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 nutsandbolts 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 Here to Help!


Registered User Joined: 3/12/2005 Posts: 2

You have certainly cleared the fog on this baffling concept! Thanks.


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

That makes me VERY happy. It was the goal of this video!
 Craig Here to Help!


Registered User Joined: 12/16/2004 Posts: 2

How do you transfer pcf's to my computer?


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 Here to Help!


Registered User Joined: 4/8/2005 Posts: 12

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


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

Glad you enjoyed it....
Here is everything but thrown back 10 days.
MACD 10 days ago (XAVGC20.10XAVGC40.10)
MACD Crossing Up Through Zero 10 days ago (XAVGC20.11XAVGC40.11)<0 AND (XAVGC20.10XAVGC40.10)>0
MACD Crossing Down Through Zero 10 days ago (XAVGC20.11XAVGC40.11)>0 AND (XAVGC20.10XAVGC40.10)<0
MACD Histogram 10 days ago (XAVGC20.10XAVGC40.10)(XAVG(XAVGC30.10,20)XAVG(XAVGC40.10,30))
MACD Histogram Crossing From Negative to Positive 10 days ago (XAVGC20.10XAVGC40.10)>(XAVG(XAVGC30.10,20)XAVG(XAVGC40.10,30)) AND (XAVGC20.11XAVGC40.11)<(XAVG(XAVGC30.11,20)XAVG(XAVGC40.11,30))
MACD Histogram Crossing From Positive to Negative 10 days ago (XAVGC20.10XAVGC40.10)<(XAVG(XAVGC30.10,20)XAVG(XAVGC40.10,30)) AND (XAVGC20.11XAVGC40.11)>(XAVG(XAVGC30.11,20)XAVG(XAVGC40.11,30))
 Craig Here to Help!


Registered User Joined: 3/4/2005 Posts: 8

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


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 Here to Help!


Gold Customer
Joined: 10/7/2004 Posts: 111

Craig 
Where is the video Understanding Stochastics that you said would be released a few days ago?


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 Here to Help!


Registered User Joined: 3/18/2005 Posts: 5

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....


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 Here to Help!


Gold Customer
Joined: 10/7/2004 Posts: 111

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.


Registered User Joined: 3/18/2005 Posts: 5

Craig,
Geo. here.
12269 or faster. make it so I can change the perimeters at will.
thanks in advance...........


Registered User Joined: 3/18/2005 Posts: 5

The .25 or .50 lets me give MACD depth. I want the change to be deep.
geo........


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

Here you go:
(((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))<=.25) AND ((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))>((XAVGC12.1XAVGC26.1)(XAVG(XAVGC12.1,9)XAVG(XAVGC26.1,9))) AND ((XAVGC12.2XAVGC26.2)(XAVG(XAVGC12.2,9)XAVG(XAVGC26.2,9)))<((XAVGC12.1XAVGC26.1)(XAVG(XAVGC12.1,9)XAVG(XAVGC26.1,9)))
 Craig Here to Help!


Registered User Joined: 3/18/2005 Posts: 5

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........


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

(((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))<=.25) AND ((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))>((XAVGC12.1XAVGC26.1)(XAVG(XAVGC12.1,9)XAVG(XAVGC26.1,9))) AND ((XAVGC12.2XAVGC26.2)(XAVG(XAVGC12.2,9)XAVG(XAVGC26.2,9)))>((XAVGC12.1XAVGC26.1)(XAVG(XAVGC12.1,9)XAVG(XAVGC26.1,9)))
 Craig Here to Help!


Registered User Joined: 3/3/2005 Posts: 6

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


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

Do the settings of the PCF match the settings on your chart? Are you looking at a daily chart?
 Craig Here to Help!


Registered User Joined: 3/3/2005 Posts: 6

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


Registered User Joined: 3/3/2005 Posts: 6

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 (XAVGC20.10XAVGC40.10)<(XAVG(XAVGC30.10,20)XAVG(XAVGC40.10,30)) AND (XAVGC20.11XAVGC40.11)>(XAVG(XAVGC30.11,20)XAVG(XAVGC40.11,30))
This is the formula posted on 4/14/05 above:
(((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))<=.25) AND ((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))>((XAVGC12.1XAVGC26.1)(XAVG(XAVGC12.1,9)XAVG(XAVGC26.1,9))) AND ((XAVGC12.2XAVGC26.2)(XAVG(XAVGC12.2,9)XAVG(XAVGC26.2,9)))>((XAVGC12.1XAVGC26.1)(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


Worden Trainer
Joined: 10/1/2004 Posts: 18,819

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 Here to Help!


Registered User Joined: 4/30/2005 Posts: 1

QUOTE (Craig_S) (((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))<=.25) AND ((XAVGC12XAVGC26)(XAVG(XAVGC12,9)XAVG(XAVGC26,9)))>((XAVGC12.1XAVGC26.1)(XAVG(XAVGC12.1,9)XAVG(XAVGC26.1,9))) AND ((XAVGC12.2XAVGC26.2)(XAVG(XAVGC12.2,9)XAVG(XAVGC26.2,9)))>((XAVGC12.1XAVGC26.1)(XAVG(XAVGC12.1,9)XAVG(XAVGC26.1,9)))
WHEN I PUT THIS IN IS SAYS ERROR IN FORMULASYNTAX CANYOU FIX THE PROBLEM THX FRANK


Worden Trainer
Joined: 10/7/2004 Posts: 58,914

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 Personal Criteria Formulas TC2000 Support Articles


Registered User Joined: 11/11/2004 Posts: 38

The video (for MACD Histogram)doesn;'t load?


Registered User Joined: 5/29/2005 Posts: 4

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 (XAVGC20XAVGC40)
MACD Histogram Today (XAVGC20XAVGC40)(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 '(XAVGC20XAVGC40)(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.


Worden Trainer
Joined: 10/1/2004 Posts: 4,308

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 Teaching Online!


Registered User Joined: 5/29/2005 Posts: 4

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.


Worden Trainer
Joined: 10/1/2004 Posts: 4,308

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 Teaching Online!


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