Question for Jack Hershey
Peter Neran
can you please answer the following regarding the XO of the 5/13/6 MACD red
and blue lines....
I am using a 5-minute chart for ESH0, I want to sell when the blue & red
maxes out and the blue
is on the way down and crosses the red (in QCHARTS). But, there isn't a
'clean, sharp' crossover,
sometimes the market dawdles around here, the blue line crosses down, then
goes back up,
then goes down, up again, and this happens over a range. So, how does one
know when it is a
definite crossover? I recently added volume, OBV, 5/3/3 Stochastic and am
trying to see if these
may help determine a good crossover. In addition, when a position is
entered, the blue may dance
around the red, may go up and crossover the red, then come down again. Very
nerve-racking is this, in
real time! In hindsight, it looks damn good, very clean. Do you have a
suggestion for a stop loss level?
Thanks.
Eric Langley
cents in.
I like MACD, but.... any indicator is going to oscilate when the market
flattens out.
I like to use MACD with Linear Regression Angle LRA. For instance, you enter
the market when the MACD crosses over but only when the LRA is in the
direction you are trying to trade in. This eliminates what would appear to
be very nice trades. So what. You are also eliminating many trades that just
don't go anywhere. You can further cut down on the number of trades by
specifying multiple values for LRA that have to line up and also multiple
MACD indicators. All must line up to get a trade. You miss a lot of nice
moves but thats life.
You might want to consider getting out when any ONE of these indicators no
longer lines up.
Eric Langley
Deep South Omega Research User Group
www.4trader.net/DSORUG
Peter Neran <dbis...@systec.com> wrote in message
news:89f3s...@enews2.newsguy.com...
vladimir
Would You,please,explain how to construct LRA or what is manual
approach to it? I have to admit, that i have no clue.I have
almost abandoned MACD as a tool, because of low accuracy,so if
LRA is a cure ,even partial,it would be great.Thank You.
Cordially,
Vladimir
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Jack Hershey
Your query on ES00H (quote.com symbol) for the other day on 5 min bars is
right on. the "entwining you describe is an indication of an important
aspect of MACD. First the 5/13/6 is appropriate and trading on the 5 min
bars is great as well.
The chart that could be printed off quote.com this am or today for that
matter is well illustrates you concerns. I will, in an after the fact way
(you see that aspect too--it being easy after the fact) make some very
strong points to tie together what you have succeeded in becoming sensitive
to.
Note the different paced illustrated. the long and short trends before noon
were text book pure so no problem. See how fast the pace is there by noting
the angle at the peak. It is much less than 90 degrees. almost the fastest
that appears. There is one level faster called "a leg" pace. The opening
gap today sort of illustrates that as you look at MACD. Everything I have
mentioned so far
illustrates the divergence of the red and blue and the ease of "pure" trend
trading. You have that down and how you are stopping is working ( you're
not troubled there and you are exiting at market i would bet or you are
nicelt reversing as is the best possibility--good)
At noon your anxiety and frustration began because of the entwining which
you observed as a messy signal----Here is what to use as a guide. but a
dollar bill on the chart and see the 90degre angle at noon here the long
trend began. First regognise this as a change of pace. And also recognise
the market is not equally able to go up and go down. Up is harder than
down. So the slower paced up long trend is staging up. I use the 1 min bar
to verify this ( and also know when the stages are coming. Advances occur
when the 1 min and 5 min are in the same trend and stalls occur when they
oppose each other, lateral if equal, retracements if the 1 min is stronger.
You may conclude, then that the slow pace is signalled by entwining and you
can just make money slower without anxiety. Use the 1 min bar to see when
and why the XO's occur; it will caus less concern. Eric has a good
substitute for my 1 min bar approach that is less enervating. His
regression line (LRA) measures the equilibrium of the trend. How it is
tipped is the equilibrium for the n he chooses. He can tell us how many bars
(n) he determines to be sufficient. most software is set up for that to be
the only variable available for linear regression. Raff went one further
and off set the regression line above and below by picking the most extreme
value in the envelope to set the half width from equilibrium. Thus you have
a channel and then when it is violated you perceive a BO of the trend. My
approach at this point for everyone is to simply add a right trend line. We
are copacetic either of the three ways. As an aside you can use three
regression lines to help you out with a quicky type signal that is a little
mesmerizing. Use a set of lines with n equal to 40, 20 , and 10. you have
a pinwheel at the end of the bar chart. It goes CCW as a long trend ends
and maybe goes flat for congestion or continues its spin for reversals. for
short trend endings it goes CW. I kind of hate to make trading so easy, but
it certainly is a neat way to differentiate between trends and non trends.
Okay all that is left is to max your profits with the stops. This is major.
I commented to James yesterday regarding stop tightness. In the ES00H
(quote.com) degree of liquidity it is hard for the scalper influence to nail
you usually. And you still want to max the profits. On the five min when
divergence is clear keep your stops tight. if you have a an entwined
situation indicating a trend
( equilibrium is tipped for regression lines or the MACD is tipped (stronger
indication) or MACD is entwined "away" (less strong))let you stops be loose.
Next look at short term volatility (or think of it as a progression thru
congestion, convergence and centering). Everything is narrowing down. bar
length, the band width of the channel and so on. At this time I recommend
for the sophisticated attentive trader, that you can exit on the most
profitable side of the envelop and just observe how must earlier you get out
for the same value which "might" occur latter if the trend does expire a
little later at that level. most of the time you get out in a satisfactory
way and, especially in response to your post, you eliminate the anxiety of
the last throws of a slow paced trend. Thick of this as the "early coffee
break" exit.
Eric and Vladimer correctly add a good collateral signal that enhances
trading. Any time you can have a concurrence of signals in muddy waters you
are on good ground and you can leave trailing stops loose. As trend
tapers off in entwined low equilibrium go out on the favorable side of the
channel "noise" width and have a cup of coffee.
I posted a while back on using volatility compression as a " reversal"
signal. I did not want to address how to measure congestion using MACD
since it isn't really on the table. I will get to it when we move from the
alternative to FDates level to a level where we are considering optimizing
profits instead of just having a substitute for making 75,000 dollars a
year. When you begin to consider alternative markets as part of optimizing.
FDates just considers the spectrum as a wild combination of extrodinary
skill in predicting with indicators only (indicators FDates says correctly
have nothing to do with a system for making money. FDates are just an
adjunct.
Peter, Eric and Vladmir are at a point where they are optimizing profits by
being in a market (ES00H) that has inherently better characteristics than
other markets. The next optimizing occurs when the trading approach is
enhanced. The optimizing after that occurs as the timing within the
approach is optimized, for instance going from position to intraday or vice
versa and several other levels of timing detail. The optimizing after that
is related to how to maximize profits within a given trade once it is taken
on. After that it is important to link trades. Finally, the issues of risk
management and money management can be taken up because they will need to be
adjusted seriously to overcome the handicaps that are ordinarily endured
because of the lack of understanding exhibited in non-optimized trading in
given markets.
Chuck Dertds
Would really help! Thanks!
Jack
5/13/6 is appropriate and trading on the 5 min bars is great
as well. The chart that could be printed off quote.com
To be on the same page do you use quote.com's charts for
this exercise?
the angle at the peak. It is much less than 90 degrees.
almost the fastest that appears. There is one level faster
called "a leg" pace.
Jack, does angle refer to the oversold/overbought extremes
of the Macd? the angle that the line curves back toward
center?
Use a set of lines with n equal to 40, 20 , and 10. you
have a pinwheel at the end of the bar chart. It goes CCW
as a long trend ends and maybe goes flat for congestion or
continues its spin for reversals. for short trend endings
it goes CW.
Jack, are you referring to a 3 moving averages with
parameters of 40, 20 ,10? Pinwheel? Is that a chart
pattern?
( equilibrium is tipped for regression lines or the
> MACD is tipped (stronger indication) or MACD is entwined
"away" (less strong))let you stops be loose.
tipped????? entwined? Is that when the lines barely
crossover (XO)?
And could you further explain the nuance of max or min in
this statement " Fastline crosses 0 within 7.5 minutes of
max/min...?????
Thank you Jack
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Jack Hershey
"Jack" <jac...@iname.com> wrote in message
news:2b379918...@usw-ex0110-075.remarq.com...
> Hi Jack, Please comment?
>
> 5/13/6 is appropriate and trading on the 5 min bars is great
> as well. The chart that could be printed off quote.com
Yes, or watch RT or delayed time during day. the 1 min is also used as a
leading indicator of the 5 min. I pull the 1 min charts for printing and
saving to floppy at 10, 12, 2 and EOD
>
> To be on the same page do you use quote.com's charts for
> this exercise?
yes and their 5 13 6 MACD and MA of MACD.
>
> the angle at the peak. It is much less than 90 degrees.
> almost the fastest that appears. There is one level faster
> called "a leg" pace.
>
> Jack, does angle refer to the oversold/overbought extremes
> of the Macd? the angle that the line curves back toward
> center?
>
Its the full scale size chart( tool bar killed) lower portion where MACD is.
Form the angle by drawing the right trend lines (long and short) on the
MACD pair (red and blue lines)
> Use a set of lines with n equal to 40, 20 , and 10. you
> have a pinwheel at the end of the bar chart. It goes CCW
> as a long trend ends and maybe goes flat for congestion or
> continues its spin for reversals. for short trend endings
> it goes CW.
>
> Jack, are you referring to a 3 moving averages with
> parameters of 40, 20 ,10? Pinwheel? Is that a chart
> pattern?
No these are what I call multiple regression lines (MLR) but in the post
they were referred to as MLA's The "n" of the MLR's are 40 bars, 20 bars
and 10 bars. the right ed of all MLR's is at the right most bar (now bar).
So the pinwheel sticks to the left at various angles of equilibrium. the
shorter the bar the more active it is, so it appears to spin as the peaks
and valleies are formed and it goes "flat" in congestion convergence and
centering. You can use the "flat" to set you post nontrend bracket entry
for the market to move to.. I use a minimum 10 pt + 7pt antiscalp = 17
either way on the centering value. This way you use stops and never go in
until the trend as begun. Wider brackets come from higher volatility
centering ( heavy volume days, for example). There are two philosophical
ways to enter on near "0" Break Outs (BO). Prediction and anticipation.
Since I am risk adverse I don't predict (it doesn't work) and I do set stops
for the market to ckoose from. the market has always chosen the right one
and the other became my first trailing stop. Philosophically, it is clear
to me that the job of choosing trends always is the market's responsibility.
There are periodic debates here where the relative importance of the entry
or exit is discussed. If a trading approach is used that minimizes risk
(the market in its good way moves to the stops set for profits), then the
discussion is like something the Mad Hatter would host for tea in Alice in
Wonderland, i .e., Lewis Carrol mathematically derived, but insignificant on
all counts since the market not the trader makes the decision. having a
pinwheel going makes it kind of fun and very very obvious, more lemon
anyone.
>
> ( equilibrium is tipped for regression lines or the
> > MACD is tipped (stronger indication) or MACD is entwined
> "away" (less strong))let you stops be loose.
>
> tipped????? entwined? Is that when the lines barely
> crossover (XO)?
>
Tippe means there is a slope of some sort.. a trend in other words.
Entwined "away" is two words describing the MACD being flat BUT offset from
"0". the sign of the MACD determines the trend that is there + is long
and - is short. this is not congestion it is a slow fractal trend. You can
pair up to 30, 10 or 15, 5 to see what you usually see on the 5,1 chart
pairs.
> And could you further explain the nuance of max or min in
> this statement " Fastline crosses 0 within 7.5 minutes of
> max/min...?????
>
> Sure. The fast line is our signal line for 75,000 dollars a year thinking
(the bleachers). The potential action signal starts 7 1/2 minutes or less
before the floor does the trade. We actually get there (on the floor 5 to 7
minute or so from this start). Trader thinks this is not possible or real he
says as I understand him.. we start at every peak (max) or trough (min) to
see if we are going to call in. First for this to be valid start, the max
or min must be "away" (10 points away at least), if not, we sit it out
because of lack of rollercoasterness or "momentum" of the potential
crossing. Next, the sustaining of the momentum is measured by the time it
takes to cross. If it is over 7 1/2 mins, then it pooped out and probably
isn't going to be a trend after all. Coool. No call is going in. If it is
less than 7 1/2 minto get to "0" (XO) then we are making the call by then so
we are stopped an poised for the market to carry into our stop.
Thats the nuance as I see it. If I am brief it gets a little nuancy.
Without the nuance flavor I drift to pscho or techno babble depending upon
which edge the B group person rides. I enjoy trying to be informative
either way. It took me a while to locate your post, Jack and I think it
was a good one and helpful. I think you can see that by the time we get to
the box seats on this stuff we are going to be able to afford the hot dogs.
Once the indicators are flowing instead of always too late, the ball game
picks up because the risk is zeroing out and the opportunities are always in
the offing and there is no rush to make the call. The stop "knitting" we
did a while back nicely separated analysis from the calling. You are doing
one or the other and never both.. All the above stuff helps you pick the
correct stop off the prewritten list. It makes for alot of recovered points
from the often missed prior kinds of trading. I hate to say this almost but
it can be 15 points on each side of a turn and that is another 75,000
dollars a year of you only do one turn a day. Like carving those turns with
a little reverse shoulder power rotation. Remember Stein Erikson pulling
down those medals with less motion....lol......