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Registered User
Joined: 11/30/2007
Posts: 17
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I am working with moving average pairs, testing different values for crossover indicators. Examples are 3 bar / 7 bar or 4-bar / 8-bar. I would like to compare a MACD for these to see if it might be a leading indicator, but am not sure how to structure it. For example, if I am looking at a 4-bar / 8-bar moving average, and try a MACD of 4-8-10 it doesn't seem to indicate (visually) the difference between the 4-bar and 8-bar moving average.
Sorry, I still am not adept enough to copy and paste a chart into this window to show what I mean. But if the 4-bar MA is moving at an accelerating rate to the 8-bar, I'd like a MACD that would indicate this.
Also, in the short / medium term (<1 day to 5 days) does anyone have recommended pairs of MAs which they have found to be useful indicators?
Thanks
John
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Administration
Joined: 9/30/2004
Posts: 9,187
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MACD Short Avg 4 and Long Avg 8 will plot the diff between a 4 and 8 bar avg. Make sure average types are the same on all (simple or exponential).
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Typically the simplest way to look at cycles is
with the MACD histogram.
(easier to see when it turns up or down)
To avoid the confusion of figuring out the
three parameters. (12,26,9)
Make the second value double the first and the
last value equal to the first.
4,8,4
6,12,6
10,20,10
and so on.
Optimal parameters will change depending
on the dominant cycle that is present in the
stock price.
(assuming it is in a "cycle mode" and not
a "trend mode")
Thanks
diceman
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Registered User
Joined: 11/30/2007
Posts: 17
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Diceman, Stockguy, et al.
Thanks for your comments.
However, sorry to say, I'm just not getting this.
If I have a 4-bar / 8-bar moving average comparison, at the point the 4-bar crosses the 8-bar, the MACD histogram would be 0, right? If I plot a 4-8-4 MACD histogram this does not happen. (All indicators are exponential).
Re: stockguy's input, I get the point that the leading 4-8 portion must correspond to my two MA's but it appears to me that the 3rd figure -- the period -- is the crucial one here, and in poking around on the web for MACD formulas, I didn't come across a good explanation of the meaning of the periodicity.
Continued thanks
John
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Registered User
Joined: 1/28/2005
Posts: 6,049
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When you use: 4,8,4
A 4 period average (last number) is applied to the
first 4,8 relationship (typically a difference
sometimes a percent)
The difference between those averages is
what you see above and below zero.
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If you want just the 4 and 8 above and below zero.
You would have to plot:
XAVGC4-XAVGC8
As a custom indicator.
Select "center zero line"
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You may be interested in this:
Thanks
diceman
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