Macd yaxsi – Binary Options göstəriciləri

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MACD and Stochastic: A Double-Cross Strategy

Ask any technical trader and they will tell you the right indicator is needed to effectively determine a change of course in a stock’s price patterns. However, anything one “right” indicator can do to help a trader, two compatible indicators can do better.

This article aims to encourage traders to look for and identify a simultaneous bullish MACD crossover along with a bullish stochastic crossover and use these indicators as the entry point to trade.

Key Takeaways

  • A technical trader or researcher looking for more information can benefit more from pairing the stochastic oscillator and MACD, two complementary indicators, than by just looking at one.
  • Separately, the two indicators function on different technical premises and work alone; compared to the stochastic, which ignores market jolts, the MACD is a more reliable option as a sole trading indicator.
  • However, the stochastic and MACD are an ideal pairing and can provide for an enhanced and more effective trading experience.

Pairing the Stochastic and MACD

Looking for two popular indicators that work well together resulted in this pairing of the stochastic oscillator and the moving average convergence divergence (MACD). This team works because the stochastic is comparing a stock’s closing price to its price range over a certain period of time, while the MACD is the formation of two moving averages diverging from and converging with each other. This dynamic combination is highly effective if used to its fullest potential.

Working the Stochastic

The history of the stochastic oscillator is filled with inconsistencies. Most financial resources identify George C. Lane, a technical analyst who studied stochastics after joining Investment Educators in 1954, as the creator of the stochastic oscillator. Lane, however, made conflicting statements about the invention of the stochastic oscillator. It’s possible the then-head of Investment Educators, Ralph Dystant, or even an unknown relative from someone within the organization, created it. 

A group of analysts most likely invented the oscillator between Lane’s arrival at Investment Educators in 1954 and 1957, when Lane claimed the copyright for it. 

There are two components to the stochastic oscillator: the %K and the %D. The %K is the main line indicating the number of time periods, and the %D is the moving average of the %K.

Understanding how the stochastic is formed is one thing, but knowing how it will react in different situations is more important. For instance:

  • Common triggers occur when the %K line drops below 20—the stock is considered oversold, and it is a buying signal.
  • If the %K peaks just below 100 and heads downward, the stock should be sold before that value drops below 80.
  • Generally, if the %K value rises above the %D, then a buy signal is indicated by this crossover, provided the values are under 80. If they are above this value, the security is considered overbought.

MACD And Stochastic: A Double-Cross Strategy

Working the MACD

As a versatile trading tool that can reveal price momentum, the MACD is also useful in the identification of price trends and direction. The MACD indicator has enough strength to stand alone, but its predictive function is not absolute. Used with another indicator, the MACD can really ramp up the trader’s advantage.

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If a trader needs to determine trend strength and direction of a stock, overlaying its moving average lines onto the MACD histogram is very useful. The MACD can also be viewed as a histogram alone.

MACD Calculation

To bring in this oscillating indicator that fluctuates above and below zero, a simple MACD calculation is required. By subtracting the 26-day exponential moving average (EMA) of a security’s price from a 12-day moving average of its price, an oscillating indicator value comes into play. Once a trigger line (the nine-day EMA) is added, the comparison of the two creates a trading picture. If the MACD value is higher than the nine-day EMA, it is considered a bullish moving average crossover.

It’s helpful to note there are a few well-known ways to use the MACD:

  • Foremost is the watching for divergences or a crossover of the center line of the histogram; the MACD illustrates buy opportunities above zero and sell opportunities below.
  • Another is noting the moving average line crossovers and their relationship to the center line.

Integrating Bullish Crossovers

To be able to establish how to integrate a bullish MACD crossover and a bullish stochastic crossover into a trend-confirmation strategy, the word “bullish” needs to be explained. In the simplest of terms, bullish refers to a strong signal for continuously rising prices. A bullish signal is what happens when a faster-moving average crosses up over a slower moving average, creating market momentum and suggesting further price increases.

  • In the case of a bullish MACD, this will occur when the histogram value is above the equilibrium line, and also when the MACD line is of greater value than the nine-day EMA, also called the “MACD signal line.”
  • The stochastic’s bullish divergence occurs when %K value passes the %D, confirming a likely price turnaround.

Crossovers in Action: Genesee & Wyoming Inc.

Below is an example of how and when to use a stochastic and MACD double-cross.

Note the green lines showing when these two indicators moved in sync and the near-perfect cross shown at the right-hand side of the chart.

You may notice a couple of instances when the MACD and the stochastics are close to crossing simultaneously: January 2008, mid-March and mid-April, for example. It even looks like they did cross at the same time on a chart of this size, but when you take a closer look, you’ll find they did not actually cross within two days of each other, which was the criterion for setting up this scan. You may want to change the criteria so you include crosses that occur within a wider time frame so you can capture moves like the ones shown below.

Changing the settings parameters can help produce a prolonged trendline, which helps a trader avoid a whipsaw. This is accomplished by using higher values in the interval/time-period settings. This is commonly referred to as “smoothing things out.” Active traders, of course, use much shorter timeframes in their indicator settings and would reference a five-day chart instead of one with months or years of price history.

The Strategy

First, look for the bullish crossovers to occur within two days of each other. When applying the stochastic and MACD double-cross strategy, ideally, the crossover occurs below the 50-line on the stochastic to catch a longer price move. And preferably, you want the histogram value to already be or move higher than zero within two days of placing your trade.

Also note the MACD must cross slightly after the stochastic, as the alternative could create a false indication of the price trend or place you in a sideways trend.

Finally, it is safer to trade stocks trading above their 200-day moving averages, but it is not an absolute necessity.

Special Considerations

The advantage of this strategy is it gives traders an opportunity to hold out for a better entry point on up-trending stock or to be surer any downtrend is truly reversing itself when bottom-fishing for long-term holds. This strategy can be turned into a scan where charting software permits.

With every advantage of any strategy presents, there is always a disadvantage. Because the stock generally takes a longer time to line up in the best buying position, the actual trading of the stock occurs less frequently, so you may need a larger basket of stocks to watch.

The stochastic and MACD double-cross allows the trader to change the intervals, finding optimal and consistent entry points. This way it can be adjusted for the needs of both active traders and investors. Experiment with both indicator intervals and you will see how the crossovers will line up differently, then choose the number of days that work best for your trading style. You may also want to add a relative strength index (RSI) indicator into the mix, just for fun.

Elder Impulse System — Powerful and Versatile Trading Strategy

The Elder Impulse System (EIS) is a technical analysis tool that combines two different indicators and turns them into a powerful trading system. It can be used to determine optimal entry and exit points, as well as to spot an upcoming trend reversal. Being a powerful trading system on its own, it can also be combined with other technical analysis tools. The EIS can be applied to any asset and any time frame. Read the full article to understand how to set up and use the Elder Impulse System in trading.

How it works?

As already mentioned, the Elder Impulse System is a combination of two indicators: a 13-day exponential moving average (EMA) and a MACD-Histogram. Both have a function of their own. The EMA is aimed at spotting the trend, while the MACD-Histogram identifies the momentum (the rate of the rise or fall in prices).

The EIS on the IQ Option platform

The Elder Impulse System is represented as a series of bars under the price chart. Green bars correspond to the periods of bullish market, when both the trend and momentum are positive. Red bars, in turn, correspond to the periods of bearish market, when the trend is going down, but momentum is still growing. Grey bars correspond to mixed signals, when neither bulls no bears dominate the market.

How to apply in trading?

There are several ways to apply the Elder Impulse System in trading.

First is to use the indicator as a self-sufficient trading tool. When several green bars appear in a sequence, bulls are said to dominate the market. When the opposite is true, and several red bars appear one by one, bearish sentiment is said to be prevalent. Traders may consider opening the deal in the corresponding direction.

You should, however, note that this indicator is not capable of determining the trend duration. It is, therefore, impossible to tell when the prevailing trend will come to an end. Volume indicators can help, as the trading volume is generally higher during the initial phases of strong trends.

Trends of different lengths, identified by the EIS

When trading with the EIS alone, it may be wise to wait for a confirmation. In this case, a confirmation is 2–3 consecutive bars of the same color. Despite the fact that the Elder Impulse System can be used on its own, it is still possible to combine it with technical analysis indicators of different types: volatility, volume, etc.

Note that you can use the EIS as a supportive tool for other indicators. Let’s say you are trading with an Alligator as your primary tool. In this case you can still consult the Elder Impulse System to avoid false signals. The risk of opening a loss-making deal will be lower when a buy or sell signal, sent by the primary indicator, is confirmed by the same type of signal sent by Elder Impulse System.

Positive and negative trends identified by the EIS

This is what Alexander Elder, the man behind the EIS, said about this indicator:

“The Impulse System encourages you to enter cautiously but exit fast. This is the professional approach to trading, the total opposite of the amateur’s style. Beginners jump into trades without thinking too much and take forever to get out, hoping and waiting for the market to turn their way.”

It is worth remembering that Elder Impulse System, as any other technical analysis tool, is incapable of sending accurate signals 100% of the time. From time to time it may — and will — provide you with false signals. It is your task, as a trader, to identify and filter them out.

How to set up?

Setting up the indicator is easy. In order to do so, follow the steps below:

1. Click on the ‘Indicators’ button in the bottom left hand corner of the trade room,

2. Go to the ‘Trend’ tab,

3. Choose the Elder Impulse System from the list of available options and click ‘Apply’ without changing the setting.

The indicator is now ready to use. Note that you can also adjust the settings according to your liking. As there are quite a lot of them, you better understand how each of them will affect the indicator before changing them.

Now, when you know how to trade with the Elder Impulse System, you can proceed to the trading platform and give this strategy a try! If you wish, there is always an opportunity to try it out on the demo account first, and then emulate your strategy on the real account.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Elder Impulse System — Powerful and Versatile Trading Strategy

The Elder Impulse System (EIS) is a technical analysis tool that combines two different indicators and turns them into a powerful trading system. It can be used to determine optimal entry and exit points, as well as to spot an upcoming trend reversal. Being a powerful trading system on its own, it can also be combined with other technical analysis tools. The EIS can be applied to any asset and any time frame. Read the full article to understand how to set up and use the Elder Impulse System in trading.

How it works?

As already mentioned, the Elder Impulse System is a combination of two indicators: a 13-day exponential moving average (EMA) and a MACD-Histogram. Both have a function of their own. The EMA is aimed at spotting the trend, while the MACD-Histogram identifies the momentum (the rate of the rise or fall in prices).

The EIS on the IQ Option platform

The Elder Impulse System is represented as a series of bars under the price chart. Green bars correspond to the periods of bullish market, when both the trend and momentum are positive. Red bars, in turn, correspond to the periods of bearish market, when the trend is going down, but momentum is still growing. Grey bars correspond to mixed signals, when neither bulls no bears dominate the market.

How to apply in trading?

There are several ways to apply the Elder Impulse System in trading.

First is to use the indicator as a self-sufficient trading tool. When several green bars appear in a sequence, bulls are said to dominate the market. When the opposite is true, and several red bars appear one by one, bearish sentiment is said to be prevalent. Traders may consider opening the deal in the corresponding direction.

You should, however, note that this indicator is not capable of determining the trend duration. It is, therefore, impossible to tell when the prevailing trend will come to an end. Volume indicators can help, as the trading volume is generally higher during the initial phases of strong trends.

Trends of different lengths, identified by the EIS

When trading with the EIS alone, it may be wise to wait for a confirmation. In this case, a confirmation is 2–3 consecutive bars of the same color. Despite the fact that the Elder Impulse System can be used on its own, it is still possible to combine it with technical analysis indicators of different types: volatility, volume, etc.

Note that you can use the EIS as a supportive tool for other indicators. Let’s say you are trading with an Alligator as your primary tool. In this case you can still consult the Elder Impulse System to avoid false signals. The risk of opening a loss-making deal will be lower when a buy or sell signal, sent by the primary indicator, is confirmed by the same type of signal sent by Elder Impulse System.

Positive and negative trends identified by the EIS

This is what Alexander Elder, the man behind the EIS, said about this indicator:

“The Impulse System encourages you to enter cautiously but exit fast. This is the professional approach to trading, the total opposite of the amateur’s style. Beginners jump into trades without thinking too much and take forever to get out, hoping and waiting for the market to turn their way.”

It is worth remembering that Elder Impulse System, as any other technical analysis tool, is incapable of sending accurate signals 100% of the time. From time to time it may — and will — provide you with false signals. It is your task, as a trader, to identify and filter them out.

How to set up?

Setting up the indicator is easy. In order to do so, follow the steps below:

1. Click on the ‘Indicators’ button in the bottom left hand corner of the trade room,

2. Go to the ‘Trend’ tab,

3. Choose the Elder Impulse System from the list of available options and click ‘Apply’ without changing the setting.

The indicator is now ready to use. Note that you can also adjust the settings according to your liking. As there are quite a lot of them, you better understand how each of them will affect the indicator before changing them.

Now, when you know how to trade with the Elder Impulse System, you can proceed to the trading platform and give this strategy a try! If you wish, there is always an opportunity to try it out on the demo account first, and then emulate your strategy on the real account.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

İkili seçim brokerlərinin reytinqi:
  • Binomo
    Binomo

    Ən yaxşı ikili seçim brokeridir!
    Pulsuz təlim və demo hesabı!

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