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Registered User
Joined: 1/14/2005
Posts: 9
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Good morning. Are there, could there be a relationship of similar Stochastic settings (Period, SK period, SD period) that would correlate, reflect, work in unison with MACD settings (Short, Long, Period)?? That work well together?
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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The trainers can't give setting, interpretation or investment advice, but I'll move this topic to the Stock and Market Talk forum so other traders will be more likely to see it and comment.
Understanding MACD
Understanding Stochastics
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Registered User
Joined: 2/5/2006
Posts: 1,148
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stochastics is a leading indicator, macd is a lagging indicator. therefore, stochastics is more sensitive, and subject to whipsaws. they aren't designed to give signals simultaneously.
the idea is to find securitys with overbought/oversold stochastics that also have macd divergences to create more robust signals.
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Registered User
Joined: 3/1/2005
Posts: 34
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It depends. The stochastic and MACD are excellent statistical tools. There is no majic number to be put in the filters. They need to be tuned for each stock by backtesting the filter settings so they don't give too many false readings. Of course it's a lot of trouble to reset them all the time so find some you like.
I like to set them just tight enough to take out the false noise. Of course these indicators are just one of many inputs for pulling a trigger. Read the definition of the Stochastic and the MACD indicator so you understand what it is telling you; set your filters how you want them.
In the 12 screens of the telechart pages, there are many pages to set up a variety of stochastic and MACDs with a variety of shorter filter settings to look at, and on other pages pages set up with much longer filter settings to page through for comparison sake. For calling this bear we used the MACD on the DOW and S&P 500.
For the short term filters we use a 7 day for the short and 15 day for the long. For the longer term curves we use 20 days for the short and 50 days for the long- for both the stochastics and the MACD. Of course we know when we look at the short term page what the patterns are tellilng us and we know what the longer term ones mean.
We also set up custom formulas to screen stocks as one of the means for adding to the buy sort list.
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