Thread: 1) Do you have a question on MACD?

Should you have a question about trading with MACD, here is the place where you can ask an instructor. The instructors are available 24 hours per day during worldwide business hours (Sunday afternoon thru Friday afternoon New York time). You will see the instructor's response posted after your question. (If you need help posting a chart, watch this short VIDEO.)

Good Morning, Jeremy:

I would like to ask you something that I really just don´t understand and hope you can help me out. As I said to you, I´m a scalper and I´m looking for short term signals. So, watching to the GBP/USD I´ve noticed that there´s a negative divergence in the 30m. chart MACD. So, I´m asking my self if this could be taken as a signal for a reversal in prices. In the other hand we are expecting good economical data from U.K. and this could mean that the prices could run even higher.

Thanks Jeremy!

Originally Posted by fdiago

Good Morning, Jeremy:

I would like to ask you something that I really just don´t understand and hope you can help me out. As I said to you, I´m a scalper and I´m looking for short term signals. So, watching to the GBP/USD I´ve noticed that there´s a negative divergence in the 30m. chart MACD. So, I´m asking my self if this could be taken as a signal for a reversal in prices. In the other hand we are expecting good economical data from U.K. and this could mean that the prices could run even higher.

Thanks Jeremy!

Yes, that is clear divergence but 30 minutes is too short of a time frame for the MACD divergence to be a reason to enter the trade alone. We would need other confirmations, such as a clear resistance line as this will help with stop placement. With short term trading, you have to always expect and prepare for false signals and this will help you manage your risk properly.

Hello, I just watched the MACD videos, they are great but there was one thing that got me a little bit confused. The MACD line is the difference between 2 MA (12, 26 or any other parameter). In lesson 2, like around 6:20 says that when the 2 MA move closer together, the MACD line moves down to 0, and that when the 2 MA move apart of each other, then the MACD line will move up. What I didn't understand is, when the 2 MA move closer together, the MACD line moves down to 0 meaning bottom of the chart, or 0 meaning centerline (middle of the chart)????

Thanks!!

Originally Posted by sebgar

Hello, I just watched the MACD videos, they are great but there was one thing that got me a little bit confused. The MACD line is the difference between 2 MA (12, 26 or any other parameter). In lesson 2, like around 6:20 says that when the 2 MA move closer together, the MACD line moves down to 0, and that when the 2 MA move apart of each other, then the MACD line will move up. What I didn't understand is, when the 2 MA move closer together, the MACD line moves down to 0 meaning bottom of the chart, or 0 meaning centerline (middle of the chart)????

Thanks!!

Yes, that would mean the centerline, not the bottom of the chart.

Hello Matt,
Unless I am missing something, there seem to be errors/contradictions in the Scalping with Market Depth Course. Both the course document and the video use two different versions of the market depth screen captures. One screen capture shows the "Bid" column and the left and the "Offer" column on the right. The other screen capture shows the opposite. The problem is that the audio and the text in the document are not consistent with the screen captures that are shown and discussed. This makes it very confusing to be certain of what you are trying to teach.
Compare page one and two of the course document and see these elapsed times in the video:2:14, 2:32, 3:40, 5:29, 6:33, and 7:29.
Thanks,
Nils

Originally Posted by SBNL

Hello Matt,
Unless I am missing something, there seem to be errors/contradictions in the Scalping with Market Depth Course. Both the course document and the video use two different versions of the market depth screen captures. One screen capture shows the "Bid" column and the left and the "Offer" column on the right. The other screen capture shows the opposite. The problem is that the audio and the text in the document are not consistent with the screen captures that are shown and discussed. This makes it very confusing to be certain of what you are trying to teach.
Compare page one and two of the course document and see these elapsed times in the video:2:14, 2:32, 3:40, 5:29, 6:33, and 7:29.
Thanks,
Nils

The bid or sell price will always be on the left. The buy price or offer will always be on the right.

Which course document are you speaking about. Can you post your question in the same location of the course document you are speaking about?

There are two videos for active trader. Are you speaking about video 1 or 2?

Originally Posted by Matt Russell

The bid or sell price will always be on the left. The buy price or offer will always be on the right.

Which course document are you speaking about. Can you post your question in the same location of the course document you are speaking about?

There are two videos for active trader. Are you speaking about video 1 or 2?

Matt,
I am talking about the red word "Offer" and the blue word "Bid" just above the two market depth columns (I take it that these are column labels). I'm not talking about the Bid and Offer prices. My questions are in regards to Video 1. Take a close look at the attached screen captures from your video 1. Clip 1 and 3 shows "Offer" on the left and "Bid" on the right. Clip 2 is the opposite.

It is confusing to me when the screen captures in the video are inconsistent with the audio and with one another. The audio associate with clip 3# attached is "there is an imbalance favoring the bid side", isn't this an imbalance favoring the offer side? Maybe I'm just confused about the whole concept. Either way, the video doesn't help clear anything up for me.

I did click on "Ask Question" for my original post to get to the forum but must have had the MACD video selected by mistake which took me to the wrong forum and didn't I catch it. Sorry.

Thanks for your help and sorry for the bother.

Nils

PS: If the attached images don't make it on this post, please email me and I can send them to you.

[IMG]file:///C:/Documents%20and%20Settings/Nils%20Larsen/Desktop/Active%20Trader%20Clip%201.jpg[/IMG][IMG]file:///C:/Documents%20and%20Settings/Nils%20Larsen/Desktop/Active%20Trader%20Clip%201.jpg[/IMG]

Originally Posted by SBNL

Matt,
I am talking about the red word "Offer" and the blue word "Bid" just above the two market depth columns (I take it that these are column labels). I'm not talking about the Bid and Offer prices. My questions are in regards to Video 1. Take a close look at the attached screen captures from your video 1. Clip 1 and 3 shows "Offer" on the left and "Bid" on the right. Clip 2 is the opposite.

It is confusing to me when the screen captures in the video are inconsistent with the audio and with one another. The audio associate with clip 3# attached is "there is an imbalance favoring the bid side", isn't this an imbalance favoring the offer side? Maybe I'm just confused about the whole concept. Either way, the video doesn't help clear anything up for me.

I did click on "Ask Question" for my original post to get to the forum but must have had the MACD video selected by mistake which took me to the wrong forum and didn't I catch it. Sorry.

Thanks for your help and sorry for the bother.

Nils

PS: If the attached images don't make it on this post, please email me and I can send them to you.

[IMG]file:///C:/Documents%20and%20Settings/Nils%20Larsen/Desktop/Active%20Trader%20Clip%201.jpg[/IMG][IMG]file:///C:/Documents%20and%20Settings/Nils%20Larsen/Desktop/Active%20Trader%20Clip%201.jpg[/IMG]

Ok, I see what you are saying. I just did some more research on the issue. When the Active Trader platform was first introduced, the bid and offer locations were reversed. Then they were corrected. Some of the images are taken from the old format. Please disregard those. The bid or sell price will always be on the left while the offer or buy price will always be on the right.

Matt,

I am day trader. I have watched the Videos of MACD and slow stochastics.

You said stochastics not much reliable and MACD is reliable.

You said watch the daily trend and watch out for 3 to 5 histogram bars to show the trend.

All nice, but tell me can i use hourly chart or 15 min chart for this purpose?

I am a day trader

Thanks.

Originally Posted by NMV

Matt,

I am day trader. I have watched the Videos of MACD and slow stochastics.

You said stochastics not much reliable and MACD is reliable.

You said watch the daily trend and watch out for 3 to 5 histogram bars to show the trend.

All nice, but tell me can i use hourly chart or 15 min chart for this purpose?

I am a day trader

Thanks.

One thing to keep in mind is that all technical analysis is best on the daily chart and then loses reliability as the time frame shortens. Matt will also trade short-term at times but still gets his signals from the daily chart. Having said that, if you trade on the 5-minute chart, then you would want to check out the trend on the 30-minute chart and if you trade on the 15-minute chart, you would want to check the trend on the hourly chart. But your analysis will not be as accurate as it would on the daily chart.

Originally Posted by Thomas Long

One thing to keep in mind is that all technical analysis is best on the daily chart and then loses reliability as the time frame shortens. Matt will also trade short-term at times but still gets his signals from the daily chart. Having said that, if you trade on the 5-minute chart, then you would want to check out the trend on the 30-minute chart and if you trade on the 15-minute chart, you would want to check the trend on the hourly chart. But your analysis will not be as accurate as it would on the daily chart.

Thanks for your response Thomas.

I have been watching the video courses taught by experts here.

Very useful indeed.

I understand that indicators like MACD, chart patterns may not work well with shorter time frames.

I have couple of questions to ask you :

1) Which is the better ( if not the best) technical indicator to look at short time frames. As i told you, i trade on 5 min and 15 min time frame since i am a day trader. I shall look for 30 min and 1 hr for direction of trend as you told me.

Candle stick pattern is the one i have been following all these days. Like Morning star, evening star, Doji etc. I found Probability of winning is more in this.

2) For a day trader, i guess a tight stop loss will be required, but i follow a different strategy for stop loss. I allow 250$ ( 5 % ) as stop loss in a day.
instead of 5% loss for each trade.

Example:

Equity : 5000
Maximum loss per day : 250 ( 5% )
Trades won on a particular day: 200
Loss trade : I will allow up to 450 ( 450-200 = 250)

If i loose 250 in a day, i close for the particular day. Then wait for the next day, next opportunity.

Is this right method?

if i place trades for 25000 units, it is possible that i can offord to wait 100 pips stop loss, but what i find is, i may not be able to achieve 200 pips profit in a day ( 1: 2 ratio).

I place trades 100000 units and stop loss around 250 $ a day.

Originally Posted by NMV

Thanks for your response Thomas.

I have been watching the video courses taught by experts here.

Very useful indeed.

I understand that indicators like MACD, chart patterns may not work well with shorter time frames.

I have couple of questions to ask you :

1) Which is the better ( if not the best) technical indicator to look at short time frames. As i told you, i trade on 5 min and 15 min time frame since i am a day trader. I shall look for 30 min and 1 hr for direction of trend as you told me.

Candle stick pattern is the one i have been following all these days. Like Morning star, evening star, Doji etc. I found Probability of winning is more in this.

2) For a day trader, i guess a tight stop loss will be required, but i follow a different strategy for stop loss. I allow 250$ ( 5 % ) as stop loss in a day.
instead of 5% loss for each trade.

Example:

Equity : 5000
Maximum loss per day : 250 ( 5% )
Trades won on a particular day: 200
Loss trade : I will allow up to 450 ( 450-200 = 250)

If i loose 250 in a day, i close for the particular day. Then wait for the next day, next opportunity.

Is this right method?

if i place trades for 25000 units, it is possible that i can offord to wait 100 pips stop loss, but what i find is, i may not be able to achieve 200 pips profit in a day ( 1: 2 ratio).

I place trades 100000 units and stop loss around 250 $ a day.

Glad that you found the videos helpful...

I have found Stochastics to be the best for me in the shorter time frames. Bottom line however the best indicator will be the one with which you feel the most comfortable and the one that puts pips in your account on a regular basis.

Candlesticks and their patterns are an excellent form of feedback since they are directly associated with price action.

Money Management principles are much more challenging in day trading. The Daily Stop Loss method that you mention sounds feasible. Whether or not it is the "right" method is going to vary from trader to trader. There are very few absolutes in trading. Traders will try a variety of strategies over time and tweak them periodically and totally discard them at other times. If this method is working for you and your account size is growing over time...stick with it.

With an equity of $5000 and using the 5% rule, the maximum allowed at any one time is, as you mention, %250. The individual trader may also, as you suggest, use that on a "daily stop" basis as well.

It is good that you are paying attention to money management in your trading.

Originally Posted by Richard Krivo

Glad that you found the videos helpful...

I have found Stochastics to be the best for me in the shorter time frames. Bottom line however the best indicator will be the one with which you feel the most comfortable and the one that puts pips in your account on a regular basis.

Candlesticks and their patterns are an excellent form of feedback since they are directly associated with price action.

Money Management principles are much more challenging in day trading. The Daily Stop Loss method that you mention sounds feasible. Whether or not it is the "right" method is going to vary from trader to trader. There are very few absolutes in trading. Traders will try a variety of strategies over time and tweak them periodically and totally discard them at other times. If this method is working for you and your account size is growing over time...stick with it.

With an equity of $5000 and using the 5% rule, the maximum allowed at any one time is, as you mention, %250. The individual trader may also, as you suggest, use that on a "daily stop" basis as well.

It is good that you are paying attention to money management in your trading.

Richard,

The stochastic indicator stays on top or bottom for long time. I am unable to locate the reversal with this indicator.

Secondly can you give me the link for educational videos for the fxcm traders using user name and password?

Thanks.

Originally Posted by NMV

Richard,

The stochastic indicator stays on top or bottom for long time. I am unable to locate the reversal with this indicator.

Secondly can you give me the link for educational videos for the fxcm traders using user name and password?

Thanks.

You make a good observation...

The Stochastics indicator gives its strongest selling signal when the two moving averages have been above 80 and then they close below 80. The indicator gives its strongest buying signal when it has been below 20 and then closes above 20. A trader should wait for the close below 80 to short or the close above 20 to buy the pair.

As always, taking these signals to enter a trade in the direction of the Daily trend will have the greater likelihood of success.

Regarding the videos, if you mean those within the course, you can log in through your live account. When you have the Trading Station open in your live account as opposed to in a demo, just click on the research button at the top and that will allow you to enter. If it does prompt you for a username and password, the username would be your live account number and the password would be the password that you use to log into your live account.