4macd system

[Guest leospartain]

THE 4MACD SYSTEM

 

BY ROBERT CUMMINGS

 

‘There is a time to be long, a time to be short, and a time to go fishing.’ Jesse Livemore

 

Technical Analysis: The study of charts utilizing specific price patterns and indicators, in an attempt to understand future trends or directions of a specific stock.

 

A chart, utilizing Technical Analysis, is a visual tool designed to tell you what other traders are doing, depicted as an upward or downward movement of the price and volume. These movements are representing the FEAR AND GREED OF OTHER TRADERS. The 4MACD “SYSTEM” has been designed to graphically display other traders' activity, with the goal of improving the user's probability of making a higher percent of profitable trades on a consistent basis. To master this system, one will need to look at the patterns given (in relation to any specific stock), in numerous time frames. This system is stock specific-match the stock to the pattern, analyze what you see, make a decision based on that which is shown. It is also time specific-match the time frame -4 day to 1 min time bars. Remember, don’t force the trade.

 

The FOUR MACD System introduces the very simple COMBINING OF 4 MACDs into a single indicator-i.e. to be interrupted as a single indicator in one window. It is designed to show current movements as a positive and negative image, (green, yellow, or red blue) and MUST be used in conjunction with Bollinger Bands, Price, Moving Averages, Money Stream, Time Segmented Volume (a better On Balance Volume improvement by Don Warden), Stochastics and Wilder’s Relative Strength Indicator. It has a contrarian indicator built into the system-the RED/BLUE COLUMN. The 4MACD are entered in a specific order for the purpose of producing a graphic image allowing for easier visualization of the changes that are occurring in the moving averages that predict direction of price movement. This system was originally designed for the INTRADAY and SWING traders with a desire to trade either LONG or SHORT. Although designed for the intraday and swing trader, the long-term investor will also find it useful.

 

The visual effect is obtained by switching the order of entry values in the MACD. For the negative red blue bars, the fast average is larger than the long average-opposite of how you normally would enter the values in a MACD. The green and yellow bars are entered as you normally would-a short fast which is a smaller number than the slow long number.

 

The chart is congested with all the indicators. Set up 2 tabs and substitute the Wilder Relative Strength for the TSV printed over the MACD window to relive some of the congestion. To further help you to understand this concept, enter each indicator one at a time and review its response to price change in several time frames-9-day to 1 minute. I would strongly suggest you enter the following settings before reading the rest of this paper. It will make it much easier to follow the commentary that follows.

 

Settings:

 

Top window:

 

Candlestick price chart: zoom

10 MA (Blue, wide), Exp

20 MA (Red, wide), Exp

BOLLINGER BANDS, (Magenta, wide), 7/21

Money Stream (Yellow)

 

Middle window:

 

MACD, (Blue) Exp, 17/14/7, Histogram Wide

 

MACD, (Red), Exp, 17/8/5, Histogram Wide

 

MACD (Yellow) Exp10/16//5 Histogram Wide

 

MACD, (Green), Exp, 510/5, Histogram

 

TSV (White), Exp, 14, 3 MA of the TSV, (Blue), Exp, 3 day Both wide lines.

 

WRSI 6/3 (White) with a 3 MA Exp. (Magenta)

 

Bottom window:

 

Stochastics,

Period, 17

SK, (Cyan), 3

SD, (Red), 3

 

These setting are not holy--minor adjustments can be made to match your trading style.

 

Discussion:

 

The MACD Histogram negative concept, depicts the negative forces working against the price. It is graphically shown as the red/blue columns on the chart. Combining this with the positive green and yellow, the 4 MACD HISTOGRAM become the centerpiece of a trading “system”. MACD should not be used in a vacuum. Look at all the indicators in Sync. The yellow and blue act as alerts of change in direction of the moving averages and this in turn is reflected in the movement of the stock price.

 

The MACD values are staggered so that price changes will be detected in the green bar (the fast MACD moving average} exposing yellow (slow moving average of MACD) and the same for the negative red and blue column. It can be said that the green is bullish indicator and the red is bearish indicator.

 

As an illustration: think of a traffic light with 4 colored lights. This stoplight has the usual green light with a yellow caution and the red has a blue caution light. Use this as a graphic aid in the interpretation of a chart. Visualize this multi-colored MACD, (shown in the middle window), as you would a traffic light while driving down a street. Do you see a green, yellow or red light? Dependent on the color of the light, do you start changing the momentum, (speed of movement), of your car, whether accelerating or slowing down? What are the other cars, (indicators), around you doing? Are they stopping or speeding up. Are they starting to move into your path, possibly causing you to slow down or stop unexpectedly? (Red MACD and Blue bars). The experiencing of an unexpected gap up or down in price can be compared to a car hitting you that has run a red light, unexpected and unable to predict.

 

Think of going short as driving the wrong way on a One Way Street. You know you can make it, and benefit from your change in direction, if the traffic moving in the opposite direction has currently stopped because of a red light. When the light changes, and the traffic once again starts moving, it would then benefit you to once again turn and move with the flow of traffic.

 

The difference between this example of a street light and that of a changing MACD is that at a glance with the MACD you can see all facets of the current condition or that of a coming change. You can see the direction of the current momentum. You can see the initiation of a change; you can then see that change occur as the price and momentum move in an opposite direction.

 

The price on the MACD, relative to the centerline, seems to flow in the direction of the green bars. If the Green bars are shortening but moving from below the centerline in an upward movement, the price should soon follow. If the Green bars are above the centerline but shortening and moving down; again the price should soon follow. The yellow tip depicts the change of momentum, or, a need to use caution, before it actually occurs (divergence).

 

When there is divergence of the price from the MACD, IT IS IMPORTANT TO LOOK TO THE OTHER INDICATORS FOR GUIDANCE. WHERE IS THE PRICE RELATIVE TO THE BOLLINGER BANDS, IS THE STOCHASTICS FLAT OR TUNING IN THE DIRECTION OF PRICE AND ACROSS THE 20, 80 LINES, IS THE TSV CROSSING, WHERE IS PRICE RELATIVE TO THE MOVING AVERAGES? CONFIRMATION, CONFIRMATION AND MORE CONFIRMATION. For example, if the price is in divergence to the MACD indicator, the Stochastic will remain flat above or below the 20/80 line.

 

Look at the chart in several time frames, starting at the weekly and moving down to the one minute. This should allow you to get a feeling for the trend. You should find this exercise helpful. BASED ON YOUR TRADING PERSONALITY, be it day trader, swing trader or long term investor; pick the time frame that is best for you and the stock.

 

SWING TRADERS--LOOK AT THE 1-HOUR and 30 MIN. CHARTS FOR CLEAN ENTRY AND EXIT POINTS. YOU WILL FIND IT MUCH BETTER THAN END OF DAY CHARTS IN MANY INSTANCES.

 

For intraday trades, I personally use the 15 AND 10 minute time frames to find and follow the stock but switch to 1 minute when entering or exiting the trade for the best price. I also use the 30 min and 1 hour in some low volume stocks. Some stocks will trade better in different time frames. Find the one that you are comfortable with. Remember, each stock has its own “time frame personality.” When understood, this time frame personality, whether yours or that of the stock, will help promote more successful trades.

 

This analogy may seem corny but it helps to let the colors “talk” to me. It provides for better timing, whether entering or exiting the trade. This method allows one to get in earlier as well as stay in longer for more profits. It will also keep you out of some BAD trades.

 

An example given by another reader states:

 

Think of the 4MACD as a traffic light with 4 lenses, in a line along your axis of sight, (green in front and red at the rear). These lenses all rotate at different speeds, perpendicular to your line of sight. Each lens has a colored half and a clear half so that its effect is only seen above or below the axis of rotation at any one time. Unlike an ordinary traffic light, which changes suddenly, this one changes continuously and gradually. You can sense coming changes by the increasing and decreasing amount of light visible above or below the axis of rotation.

 

There is an incredible amount of information and knowledge to be derived from reading the WORDEN NOTES, daily. This is an accumulation of many peoples’ desire to achieve the same goal but using a different way and means to get there.

 

I encourage you to experiment with different settings when using the FOUR MACD Method. Plot the MACDs as a line chart and see how it reacts to the price change in different time frames. Using another tab overlay Money Stream in the price top window for another perspective. Combine the 4 MACD with your other indicators for greater insight. This exercise will improve your ability to “see” that which the chart is telling you.

 

The Trade Setup:

 

There are three entry/exit points for a trade, the “Extremes”(oversold and overbought) position of the MACD and that of a “compression switch.”(Crossover).

 

The Ideal Setup is when the columns are at their “longest” point, either above or below the midline (0) or when the green flips up above or below the 0 midline, the price is at the top or bottom of the Bollinger Band, the TSV is crossing its average, preferably at the midline (0), but not necessarily required for a profitable trade, and the Stochastics’ moving average should be crossing up above the 20 or moving down across the 80. The WRSI will be crossing the midline on the MACD BAR at or close to the price reversal.http://www.wisestocktrader.com/paperclip/images/91/large/4MACD.png?1265524590

[Guest leospartain]

CAN SOMEONE CODE THIS INDICATOR TO MT4? THIS IS THE ESIGNAL CODE

 

 

// 4MACD.afl

 

//=Red===================

Gr1 = MACD(17,7);

Gr2 = Signal(17,7,5);

Diffr = Gr1-Gr2;

Plot((LastValue(Highest(diffr))/LastValue(Highest(diffr)))

*Diffr,"Diff",colorRed,2+4);

 

//=Green===================

Gr1 = MACD(5,13);

Gr2 = Signal(5,13,5);

Diffg = Gr1-Gr2;

Plot((LastValue(Highest(diffr))/LastValue(Highest(diffg)))

*Diffg,"Diff",colorBrightGreen,2+4);

 

//=Blue===================

Gr1 = MACD(17,14);

Gr2 = Signal(17,14,5);

Diffb = Gr1-Gr2;

Plot((LastValue(Highest(diffr))/LastValue(Highest(diffb)))

*Diffb,"Diff",colorBlue,2+4);

 

//=Yellow===================

Gr1 = MACD(12,18);

Gr2 = Signal(12,18,4);

Diffy = Gr1-Gr2;

Plot((LastValue(Highest(diffr))/LastValue(Highest(diffy)))

*Diffy,"Diff",colorYellow,2+4);

 

Plot(0,"",7,4);

GraphXSpace=5;

 

// END CODE

[vicentis]

your request as a template

 

https://anonfiles.com/file/9e390565562b3eefd471a4d57aaf48a1

 

;)

[rpasupathy]

Thanks a lot Vicentis, Edited May 10, 2013 by rpasupathy

[vicentis]

Thanks a lot Vicentis,

 

you are welcome,

 

this template has to be fine tunned, to different pairs, if we dropped different macd to the window the result will be this:

 

http://s21.postimg.org/3nzna75gn/Imagem_15.png

 

no good, so we have to set macds to fixed (minimum maximum) and adjust those values.

 

http://s15.postimg.org/7kurivf9n/Imagem_18.png

 

but from this template that is easy.

 

;o)

 

have a great weekend.

Edited May 10, 2013 by vicentis

[Guest leospartain]

Vicentis u r genius thanks

[hankt80]

Can you guys upload this to 4shared pls cos I cant download from that link

Thx

[Guest FloridaTrader]

I uploaded to 4shared.com and it took. When I tested it as a download, I got an error message stating there was a problem. I can send the template by email if members can pm me with their email address.

[Guest leospartain]

Vicentis i think if we add 0.0015 as trigger line it will be kool and 0.0045 extreem what do u think? Edited May 10, 2013 by leospartain

[Guest FloridaTrader]

Vicentis i think if we add 0.0015 as trigger line it will be kool and 0.0045 extreem what do u think?

 

Which timeframe are you interested in my good friend?

[Guest leospartain]

4hour the only tf i trade, I think the indi needs to be twicked for the Yen pairs.

[vicentis]

4hour the only tf i trade, I think the indi needs to be twicked for the Yen pairs.

 

yes indeed...

 

it as to be fine tunned to different time frames and pairs...

 

 

Vicentis i think if we add 0.0015 as trigger line it will be kool and 0.0045 extreem what do u think?

 

it would be great if someone could make a indicator from this template using atr to adjust triger and maximums....

[vicentis]

Thanks a lot Vicentis,

 

 

i tried to send you a private message but it did work..

 

please send me a picture of indicator working (from the message), please.

[hankt80]

this indi is super laggy......

[vicentis]

this will sell like hot cokies

 

will be the new secret, special, .... (choose word) indicator from Dittman and forex lady rita lasker.

 

;o)

 

XXX/jpy h4 template http://www.4shared.com/file/qAUh-Ec6/4macd_jpy_h4.html

Edited May 10, 2013 by vicentis

[rpasupathy]

Sent Vicentis. Plz check your inbox

[hermes]

MACDs are lagging and when it is 4xMACD it must lag 4 x more...ha, ha, ha.

Cheers Hermes

[Guest leospartain]

Tell me which indicator doesn't use historical data to predict future price? All indicators are lagging in nature

[mtuppers]

you will never trade without indicators, in fact that even candle stick or bar or what ever, still consider as indicator, even trend lines.

[hermes]

Those who have a FX Crystal Balls are not lagging? Only little. Wall Street is not lagging only cheating. Already the information from broker (price action) is lagging or misleading. 2 brokers, 2 different feeds, even they have the same mother.

Hermes

[anton1713006147]

So, Don't trade. Just quit from trading. hahaha...........