For that trade I will refer you to this post by GF: The trade was supported by a positive MACD Histogram and an upward trending MACD Line.
What sort of exit signals are generally used by SPM? The entries appear to normally not be too bad... however I have found tons of good "entry" strategies... but I have never found a good "exit" strategy... In my opinion exits are much more important than entry
There seems to be varying explanations. Let us rewind the tape: The ZERO line is fixed, it does not move, it is there, marked ZERO. MACD line (in blue) is 12-EMA minus 26-EMA of close SIGNAL line (in red) is 9-EMA of MACD histogram (in black) is MACD minus SIGNAL You are saying to BUY when MACD crosses above SIGNAL (blue crosses above red) and with this crossing must take place ABOVE the ZERO line? You are saying to SELL when MACD crosses below SIGNAL (blue crosses below red) and with this crossing must take place BELOW the ZERO line? Is that how it is? If not.... let us know. <img src=http://elitetrader.com/vb/attachment.php?s=&postid=2135215 width=800> click on attachment to enlarge
Hey Jahajee, no problem. Hope I can clear-up the confusion. (for those who don't know him Jahajee is an excellent bottom/top fishing trader, who is doing well even in these hyper volatile times). Everything is correct except for your definition of the MACD Histogram. "What the histogram shows in graphic form is the difference between the main MACD line (the 12-26 line) and the nine-period trigger line. This difference is then plotted on a scale to form a histogram, defined as a series of vertical lines. The higher the lines "grow" above the histogram's zero line, the stronger the price momentum and the more bullish the trend. The further the lines decline below the zero line, the stronger the negative the trend and the more downside pressure there is. When the MACD indicator itself issues a buy or sell signal, then the histogram is always at its own zero line." quote source Street Authority - MACD Histogram Here is what we (both Trader28 and myself) are saying: 1. When you have Buy Signal on the MACD Line and it is above the Zero Line (which measures price momentum) you have a STRONG BUY. 2. When you have a Buy Signal on the MACD Line and it is below the Zero Line you (which meausres price momentum) you have a WEAK BUY. 3. When you have Sell Signal on the MACD Line and it is below the Zero Line (which measures price momentum) you have a STRONG SELL. 4. When you have a Sell Signal on the MACD Line and it is above the Zero Line you (which meausres price momentum) you have a WEAK SELL. All signals need to be supported by the MACD Histogram. *** What taking these signals does is eventually teach you how to just read price action, where: 1. A strong buy means price is taking off to the upside and you are getting in on a retrace of the current trend. 2. A weak buy means price is trying to find a bottom and you may be able to get in early, but be careful and look for price confirmation, be willing to take smaller profits and/or bail if you have to. 3. A strong sell means price is dropping through the floor and you are selling a retrace of the current trend. 4. A weak sell means you are catching a reversal of the uptrend. Look for confirmation and you may need to exit/ re-enter your short if the market turns back up and makes a double top.
That last BUY had 15 points profit. Lucid. Excellent description. I am gong to backtest this, first with only buy & sell entries, no exits (of course, except buy/sell reversal). I also use momemtum to confirm my trades. Thanks.
Truely these developments are a great embaressment to Jack, he is steaming, and will stay up all night monitoring these threads. Tums is green with envy. Where is the rest of the SCT fellowship??
Out of nowhere.... T28 comes out of the shadows and beats Jack likle a rented mule! Well Tums... what do you have to say for yourself now ???