What Indicator(s) are good Compliments to the MACD in Trading?

Question

The MACD gives off a lot of signals, but they are not always good signals. I was wondering what indicators i could use to help confirm the MACD signals?

Answer 1

there is a problem with your question....you don't tell us what type of trading that you do...is it day trading or longer term.



I find it makes a difference.



For Day trading (intra-day trading) I find that the the signal line is reasonably useful though it still gives many many false alarms...but I don't day trade so my comments there are moot.



From the sounds of things you are looking at individual vales of MACD and not the trend...When I use MACD I eliminate the signal line as it complicates things...Here I'll show you



http://farm8.staticflickr.com/7249/7657152530_317be350e0_b.jpg



looking at this chart which is pretty bare bones right now... the first MACD Chart MACD(1) shows buy signals on DEC 21...again on Jun 2 (crossing the zero line)...potential sell signal on Feb 1...definite sell signal on Feb 14...Buy signal on March 13...sell signal on March 28...confirming sell on Apr 20...buy signal on May 24...confirming buy on Jun 18 and sell on July 2.



The Second Chart MACD(2) is not much better....without the signal line I trend the MACD line by drawing a straight line linking the high and low trends



In both cases I find the MACD very difficult to predict and make decisions...It has a lot of noise in the chart for me.



However if you combine MACD with Bollinger Band (BB) overlay and its corresponding indicator BBwidth and Slow Stochastics (note the 30 day look-back)



Suddenly the whole picture changes



http://farm9.staticflickr.com/8433/7657155940_8c6bcda001_b.jpg



In the same time period you see only 2 buy signals (Blue verticals) with the second is more of a confirmation... One sell sign (red vertical) and one indication of a bottom (Green vertical)



I use the Green vertical as an indication for exiting a short position



So how does this work:



1 Buy signal - the SIMULTANEOUS positive slope of MACD, BBWidth and Slow Sto

2 Sell signal - the SIMULTANEOUS negative slope of MACD, BBWidth and Slow Sto

3. Bottom signal - simultaneous rise in trend for MACD and Slow Sto with a neg slope to the BBwidth



The bottom is not necessarily the absolute bottom...rather it is an end (maybe temporary) to the fall of share price....ie. A REASON TO EXIT A SHORT POSITION



You can see a false sell signal on June 24...see how the Slow Sto rises to destroy the signal.



Test this chart before you believe me but this is a pretty reliable chart and is my goto chart for BUY/SELL signals.



You won't find this in any book but rather it is the result of years of research on my part.



Hope you find this useful.





EDIT @MD what are you talking about NORTEL does not exist as a company anymore

Answer 2

1

Answer 3

You should try with Penny Stocks Trading (you can find more info here: http://pennystocks.toptips.org )



Penny stocks, also known as cent stocks in some countries, are common shares of small public companies that trade at low prices per share.

I've been subscribing to this PennyStock web site for about a year now and have loved the objective advice they give. He really does look for quality stocks and I've made some pretty nice profits on a lot of his suggestions. Being still fairly new to investing I have been dabbling a lot in penny stocks to try and grow my account. I may not have a big account, but it's a lot bigger than it was a year ago. On just one of Nathan's picks this year I managed to make my investment back ten-fold! Be careful! Penny stocks are notoriously risky but if you follow the right method the risk is almost 0. I suggest to invest only little money first and then reinvest the profits. This is the site I'm using: http://pennystocks.toptips.org

Good Bye

Answer 4

Should use one more lagging indicator to identified the trend, and use MACD to give the signal,

http://anzforextrader.blogspot.com/2013/08/best-bb-macd-with-kijun-envelope-trend.html

Answer 5

"MACD, you are the most handsome, smart and useful indicator in all of trading" would be one.