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Traditional MACD histograms vs MT4's MACD Coding 8 replies

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Donchian Trend Monster 9 replies

BMI - MacD Magic Monster

Hi Blue Metal,

Can you please post our template?

Also you trade off the main chart or the indicator window?

I am a bit confused. If you can write down the rules that would be great...offcourse if you dont mind me asking

Thanks
Quoting fxhermit
This last signal has been a beauty. Good for about 150 pips so far and it looks like it's still going some more. The signal prior to this one was no slouch either. Yup, it is all about perspective .
Hi fxhermit.

I'm glad you see the waves. To quote another one from Frank Herbert, 'It is not dificult at all to find the balance. You have to feel the wave.'

When I get a bit of spare time, I will write up some stuff on how to read this monster. She is a sweetheart of note if you know how to hear what she says.

One other amazing thing (at least it is amazing for me) that I learnt from Clay in 'The Dance' strategy, was the powerful S/R relationship that round numbers have. I never even THOUGHT in terms of numbers before, for me it is all about pattern and flow, and one number is just like any other. Yet once it was brought to my attention, it finally clicked in my head why so many of my trades went sour when they looked perfect. They hit the round number barrier and reversed!

I hope you have set the separate window indicator as all 6 numbers combined, otherwise it seems like they are crossing while they actually are not. They have a different hight scale. I prefer to use the on chart version myself. I no longer even LOOK at the candlesticks much at all. Just the wicks sticking out is enough.

Later.
I'm glad you like.
Quoting fxhermit
Hi Bluemental,
Just curious, the moving averages are refered to as EMA's but the indicators are calculated as SMA's ??? Am I correct in that?
Sorry for that Flea on Elephant, when I originally coded it, they were SMA's, but I found them do be lacking. so I went through the whole range, (SMA,EMA,Smoothed,Linear Weighted AND set for open,close,high,low,median,typical and I couldnt do weighted close, cos I couldnt find the calc for it) but I tried it on the main chart with linear weighted. They all had some points better than others, but EMA was most consistant, so I stuck with EMA. Just forgot to change it in the IndexLabel names.

They are EMA's.
Quoting TheFutureAce
Hi Blue Metal,

Can you please post our template?

Also you trade off the main chart or the indicator window?

I am a bit confused. If you can write down the rules that would be great...offcourse if you dont mind me asking

Thanks
Hi FutureAce, don't feel bad, I am always confused.

If you look at the pictures of the original post and check the comments on the pictures themselves, those are the main things to look for. The rules are so simple it is frightening.

The first five pictures are done in that way so that you can comfortably grasp the similarity between the EMA's and the MacD. It is almost incredible how the EMA periods work with ANY MacD and the calculations in that text.

The BigMac <GRIN> 75,365,60 I found through lots and lots of trial and error.

The basic rule is this...
If the Orange and yellow numbers cross below the red line and stay there for 4 or 5 bars, go short. if the Red line drops below the thick Purple and Indigo lines, you can set a trade up to go short and literally go on holiday until the Orange and Yellow cross above the Red line. Once that Red line changes direction, from a downward trend and turns upwards, get out of the trade.

Also the further the Red line moves away from the purple line, the closer it gets to turning. Things never like to be too far from 'home'.

I hope that helps you a bit.

Try it out with them on demo or backtesting to get the feel for it. Zoom out quite a lot so you can see the bigger picture.

If the price is above or below one of the EMA's, they are stong Resistance Support area's. Things bounce off them and strugle to btreak through them.

Enough for now.
BMI
Quoting fxhermit
Here is a little Asian session scalp. Entry on the M5. Maybe it will develop legs, maybe it won't, price has dropped a long way in the last 24 hr. but there still seems to be some empty air under it. Doesn't matter one way or the other because profit stop is currently at +14 . I am liking the straight forward simplicity of this method.
There is more.... I call em Tarzan and Spiderman it is a distinct way the data arranges itself that actually shows when it wil reverse. This T&S is not directly related to the monster, but in the end all things are connected so all are related.

It doesn't show the pic while replying, so i'm going to look at it and edit further in this reply.

It is zoomed in too much for me to clearly see the pattern, but I would say that she will swing up within 12 to 15 bars from where she is in that pic to touch at the very least the bottom EMA, then as it starts to look like she is ranging, another scallop will start. Drop further and then more or less range till a slow up begins. The upsurge will go above your current position, but you do not need to stress, it is very rare to reverse after only one swing.

I would stay in that position till it becomes clear that you are breaking above 47.

I will write up on the Tarzan Spiderman thing (which is actually a bad name since both Tarzan AND Spiderman swing!) at a later stage.
Quoting BlueMental
Hi FutureAce, don't feel bad, I am always confused.

If you look at the pictures of the original post and check the comments on the pictures themselves, those are the main things to look for. The rules are so simple it is frightening.

The first five pictures are done in that way so that you can comfortably grasp the similarity between the EMA's and the MacD. It is almost incredible how the EMA periods work with ANY MacD and the calculations in that text.

The BigMac <GRIN> 75,365,60 I found through lots and lots of trial and error.

The basic rule...
Bluemental,

Could you post some pictures including your explanations in it? Thanks a lot.
Quoting fxhermit
As a swing trader I make a lot of use of the H4 as a set up timeframe. So, I thought that I would see how this methodology holds up with the way that I usually like to draw my channels and trendlines. Impressive! The signals are pretty well spot on .
I have not yet managed to gather up enough patience to actually draw the lines and channels. It is really dumb of me, because they too offer clear entry and exit points with low risk. But somehow my mind wanders off to other pastures when I contemplate drawing them.

Weird... but such is life.
Quoting Macd+ma
nice one .you find it
macd and ma are very useful and powerful tools if you put them together
and trade it skilly .
many people just think those two are lagging indicator becose they don't really
know how to use them .
i made 800-1000 pips in euro every month since 6 years ago,only using those two "lagging indicators.
sounds impossible ,hmm.but it is true.
congratulation ,i believe you will make huge pips .
Sorry for the late response.

I agree with you, you get those that say 'this indicator lags' or 'that indicator lags'. Duuuhhh... ALL indicators lag, including the graph itself, it is a history of the past.

If we were to only get a non recordable number in front of our eyes, we would need to recall the history of what it was before it is now to know if it is higher or lower than before. That is a lagging indicator!

One of the beauties of Moving Averages is that the HAVE to turn. If they go only up, it is an exponential curve, and no trade price can go up faster than it's average. Just like walking paths and rivers, they sway, not like created road with laser straight lines.

In fact, there is no such thing as a straight line, only the theory of it.

I'm glad you like. Thank you for the compliment.
An interesting way to contemplate averages is like this. A very young child, never goes further than an arms length away from her mother. Then she begins to crawl, and the distance gets a little further. Then she grows up a bit more and goes to school, and the interaction between her and her mother get further apart, but still they both move towards each other and share space. Then she gets married and moves away from home and the difference gets further.

By this stage, as the mother starts growing older, she does not deviate as much from her path as she used to. When she was her daughters age, it was rock concerts and going to the beach. Now it is a nice relaxing weekend at home reading or knitting.

Her wave pattern becomes more gradual. While her daughter's path hovers around hers.

Her path and her husbands path are similarly gradual curves, they touch and cross WAY less frequently then they used to during their honeymoon days.

The grandfather's path is almost straight! He wastes almost zero energy going left or right. His path hardly deviates, the younger ones by nature deviate their paths to not bowl him over.

So too are the MA's of the price of things. There is no 'always', only tendencies. It valuable if one can begin to recognise the alteration in the mood, which is after all what is the driving force of the tendencies. Our moods get altered by the price formation, and it's formation gets altered by our mood. Which one creates the other? They are simbiotic in nature. They are not made of the same stuff, but they drive each other by their very nature.

Just like the tick chart 'creates' the M1, which 'creates' the M5 etc...
This is not true, they flow and are built of the same cloth. The tick prices are alterred by the patterns of it's 'elders' (the M5, M34. M3000 etc.)

Yet the 'elders' can in no way at all deny altering their flow and movement in the direction of the young ones.

There is no magic in kissing a young lady. If that is the case then one would marry the first gal that he met, and she would be content since there is nothing more than 1+1 = 2?

So when you look at the data, wether it be in traditional channels and trends or pivot points or fiblines or 'no' indicator at all, try to look for the 'feel' of the data. It speaks if we can only learn how to listen.

We all listen in different ways, but the important part is to realise that we form the data, just as the data forms us. If you try to 'win' at forex, you can only lose. Life is not something you beat.

BMI
BlueMental, thanks for your replies and am looking forward to your upcoming explanations on Spiderman and Tarzan (I write movie scripts as a hobby so your making my day here ).

You wrote, "I hope you have set the separate window indicator as all 6 numbers combined, otherwise it seems like they are crossing while they actually are not. They have a different hight scale. " I am not quite sure what you mean here. I have Bg MacD on the chart(changed the colours a bit) and Sm MacD below. Does that mean Sm MacD may not read accurately in conjunction with the BG MacD?

I'm with you on the Round numbers. Round number awareness has been part of my Swing trading methodology for a long time now. Glad to hear that you have also "discovered" them and find them useful. The attached chart shows EURUSD with a nice close below the 1.2950 round number and the Sm MacD confirming with support found at the 1.2800 round number. I often use them as profit taking targets and for stop loss manegement. Good stuff.
Attached Image (click to enlarge)
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Stay calm, be brave, wait for the signs - Jasper Friendly Bear
"An interesting way to contemplate averages is like this. A very young child, never goes further..........."

Terrific analogy .... are you sure you don't work for Hollywood as well? (could be a movie in there)
Stay calm, be brave, wait for the signs - Jasper Friendly Bear
I'm not sure how clear the arrows are on this pic but you should be able to see them.

It is intentionally zoomed out so you can see it's history.

if you load up the same time on your program you will see the history a bit further back. It is not quite a natural pattern. It is basically straight, a slow and steady up trend. it spikes upwards around 03:30 (Malta Time, which is 3 hours ahead of GMT) and you can see it fails to break above MA 500. The second try does not break the MA 290 which is below 500, third try bursts above both for a short time and drops below. Then the 4th time it barely breaks above 500, to make a Lower High. At the third try, the Red MA curved definatively downward, but it was too sharp a breakthrough for me to trust. Kind of like she was sleepwalking and jolted awake suddenly. After the 4th attempt to break above, 47 started a slow gentle curve downwards.
The natural curve shape, not a slap in the face type spike like you get from news. The price drops below the 2 big ma's which are so close they are almost touching, and snuggled in the center of the two is the round number (see the dotted horizontal line...) at 143.50 (the zero's and their halves are Round Numbers. Then on the final attempt to break above, the price has yto break through ALL the MA's combined and the round number. Highly unlikely, but possible. So I wait. It touches 500 and bounces off. That is my signal to enter the short.

I wait a little more just for clarity, then I enter.

I missed the correct exit point, which was the bounce off 142.00 (a round number) Why did I miss it? because I was greedy hoping it would break through to continue the drop. But at that stage realise that the distance on the chart between the price and the nearest MA (not the yellow one, that is never far, like the mother and her baby), the FireBrick 14, is very far, which is a clear signal for a retrace at least.

So my greed cut off a good few pips off my trade. I waited till the next down and exited. If the high prior to my exit broke above the Red 47, that is a good sign to get outa there FAST. It would most likely not burst through and continue, usually third test gets through, so there is time to wait for her do go lower first. but don't hang on too long, or she gets upset with you and shoots into the sky like a rocket ship cos you did not apreciate her gifts.

<GRIN>

BMI

<EDIT> Oh, I forgot to mention, 92 pips on that one, not bad at all. <EDIT/>
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Quoting BlueMental
I have not yet managed to gather up enough patience to actually draw the lines and channels. It is really dumb of me, because they too offer clear entry and exit points with low risk. But somehow my mind wanders off to other pastures when I contemplate drawing them.

Weird... but such is life.
Yeah, I'm a bit lazy in that regard as well, that's why I like the Andrew Pitchfork tool, let's me draw the channels quickly. I don't always stick to the Pitchfork drawing rules so dyed in the wool Forkers will probably groan. I'm just interested in seeing channel lines and the median line as action reaction lines. These lines are actually just a form of trendlines. I like them because they are one of the very few leading indicators that we as traders have at our disposal. Attached chart shows how I use them to provide a heads up. The lines were in place long before price reached the median line but when it did ... Bingo on the trade signals.

P.S notice how price has currently stalled at the 1.2900 round number.
Attached Image (click to enlarge)
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Stay calm, be brave, wait for the signs - Jasper Friendly Bear
i like your perspective of looking into macd and ma.
good job

interesting thread
im trying with a simple macd (2,3,7)
on usdchf h4.. we are at critical levels .0018 => possible pullback?!

cld work on lower tf as well
Quoting fxhermit
"An interesting way to contemplate averages is like this. A very young child, never goes further..........."

Terrific analogy .... are you sure you don't work for Hollywood as well? (could be a movie in there)
In Hollywood, all cars tyres screech and gas explodes when you think of a flame.

I think I'll pass.
Quoting BlueMental
In Hollywood, all cars tyres screech and gas explodes when you think of a flame.

I think I'll pass.
So true... so true, but then the Heroe always gets the Girl
Stay calm, be brave, wait for the signs - Jasper Friendly Bear
Quoting fxhermit
Yeah, I'm a bit lazy in that regard as well, that's why I like the Andrew Pitchfork tool,
...
P.S notice how price has currently stalled at the 1.2900 round number.
Me and the Pitchfork are not very well aquainted. It seems to me to be quite a futile affair to be able to set a drawing on the 30th of April that gives me a median x-over on the 4th of May (which might have only happenned (or not happened at all) several weeks later)

I might have some patience, but not that much.

To me the fact that it is below the MA's and crosses below the uptrending channel around 30 April/ 1 May is AMPLE signal for a short.

As I am typing now, I am ignoring a trend line that signal close trade. ( I also did not close earlier at +148 pips (not through any great logic other than the fact that I was asleep when it got there, and when I awoke it was at +60)

Now because of the Monster, I KNOW that the trade is safe, it might reach drawdown of over 150, I care not.

If you look at the pic, The 500 and 290 are about to touch and probably cross over (Granny and Gramps are going to meet up for a quicky)
and the entire 12,26,9 MacD is below em.

This is going to be a groovy short.
1000 pips plus which will take approximately one month to reach.

While this trade is going on, I will continue with my usual trades, I closed the first one (as you see) for various reasons. it was sharply retracing, which might have been indicative of the last attempt to get above granny and gramps (this might still happen, but when granny and gramps wanna boogy, ain't no little 'uns gonna stop em)

Then I re-entered (yes at exactly the wrong time but in the bigger picture it makes no difference, this is guaranteed money.

So I'll leave the pitchfork to it's dedicated followers and let em stab each other waiting 3 weeks for a three day trade to form for 50 pips.
Go Guys!!! That's the way!!!

BMI

<EDIT>
Actually, checking the picture, the last trend line is not quite correct, since it is a hindsight line. It is actually supposed to be running exactly through my second trades entry point, signaling a buy, but knowing that this is the first scallop drop after a trend reversal, we know it will be a short upswing. (Fine for scalping)
The bigger trend is down though.
</EDIT>
Attached Image
"So I'll leave the pitchfork to it's dedicated followers and let em stab each other waiting 3 weeks for a three day trade to form for 50 pips."

No, BlueMental, that's not really how it works (IMHO). However, I do agree that your methodology does not require their use and I do not intend to distract from your wonderful thread with an off topic discussion on Forks. Suffice it to say that I use them as a purely visual aid just like trend lines except that they have the added convienience of giving a middle and top/bottom line at the same time. Just another way of visually structuring the landscape.

P.S. Nice going on GBPJPY
Attached Image (click to enlarge)
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Stay calm, be brave, wait for the signs - Jasper Friendly Bear
Blue mental, thanks for share this nice system.
Your heads up on G/J played nicely yesturday evening (GMT).

Wanted to ask acouple:
How many of these 1H setups you find per month (on all pairs)?
How did you come about THESE MA numbers particularly?
What are the 3 first things you look up when you first open your charts with the system?

Cheers

fundemental
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