Archives: indicator

MACD Divergence

November 12, 2009 | By jackieannpatterson | No Comments | Filed in: MACD.

MACD Divergence typically means a divergence between the MACD technical indicator and price.   The name MACD divergence is a little confusing and new traders are inevitably unclear about the definition of a MACD divergence or, most importantly, how to recognize one.  Once identified, the next question is how long after the MACD divergence signal does it remain a consideration in the analysis of price action.   • Read More »

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Tom McClellan at LA Trader’s Expo

June 16, 2009 | By jackieannpatterson | 2 Comments | Filed in: Classes.

(StockFinder® screenshot of McClellan Summation Index in yellow plotted with S&P500 in green, red arrows mark important divergences between indicator and price.) Tom McClellan’s hour at the LA Trader’s Expo started from a deep historical perspective and carried through to current market conditions.  Los Angeles was a fitting locale because it was actually reporting on local LA television • Read More »

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Gerald Appel’s “Technical Analysis Power Tools for Active Investors” – a Book Review

April 16, 2009 | By JackieAnnPatterson | No Comments | Filed in: MACD, Outside Products Reviewed, Technical Strategies.

  Reveals Widespread MACD Misconceptions – Almost, April 16, 2009 Buried in this book are clues that point to widespread misconceptions about the MACD. The clues are 1. Hints at not waiting for the MACD lines to cross to start buying 2. A calculation of MACD Histogram that is different than most, but not all, • Read More »

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New Report: MACD Buy Signals

April 11, 2009 | By JackieAnnPatterson | No Comments | Filed in: MACD, Reports, Technical Strategies.

Do you use the MACD indicator or MACD Histogram? Or follow an expert who does? If you answered “yes”, you may be leaving money on the table without even knowing it. The most recent BackTestingReport uncovered two mistakes that even experts make with the MACD and MACD Histogram. After independently researching the report, I sent • Read More »

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Stock Buy Signals

March 16, 2009 | By jackieannpatterson | No Comments | Filed in: Moving Average, Objective Trading, Strategy Development, Technical Strategies.

Here is part 2 about stock entry strategy or the buying process.   The previous article talked about stock screening, which is the background investigation to select a pool of candidate stocks to buy when the time is right.   The trigger or market timing signal is the topic of this article.     Why You Need to Time • Read More »

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BackTesting Moving Averages

March 9, 2009 | By jackieannpatterson | 7 Comments | Filed in: Backtesting Set Up, Moving Average, Reports, Technical Strategies.

Why Moving Averages As a trader or investor, the only reason to investigate moving averages is to gain knowledge to increase profits. Like many other technical indicators, moving averages are meant to help us objectively tell the market status at any given time. This helps us see through the emotions of the day and make • Read More »

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Curve-Fitting Definition

November 4, 2008 | By jackieannpatterson | No Comments | Filed in: Glossary.

 Curve-fitting in general is the process of finding the (mathematical) description which best matches a given set of data.    When its not applied to trading strategies, it can be a very useful way of drawing conclusions from experimental data.  When applied to trading strategies, curve-fitting can produce over-optimized, over-optimistic results.   In any set of price data, • Read More »

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Indicator Definition

October 27, 2008 | By jackieannpatterson | No Comments | Filed in: Glossary.

An Indicator is an abstraction of historical price data which is used to gain insight into the stock or market behavior.   Examples of popular technical indicators are Moving Averages, Bollinger Bands, MACD lines and histogram, RSI, Stochastic Oscillator. Stockcharts.com has a good comprehensive definition of technical indicators. Extra Insight: Indicators describe past market action in a • Read More »

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Naming Convention Definition

October 22, 2008 | By jackieannpatterson | No Comments | Filed in: Glossary.

My trading strategies follow this Naming Convention: [Direction]_Entry_TestPeriod_[Dataset]_Exit where: Direction is either L for buying long or S for selling short.   Direction is optional and if missing defaults to L. Entry indicates the entry strategy used. TestPeriod is the abbreviated years of the test data.   The data runs from May to April.  So 0407 means May • Read More »

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Out-of-Sample Testing Definition

October 22, 2008 | By jackieannpatterson | No Comments | Filed in: Glossary.

Out-of-sample testing is a way to guard against curve-fitting.   Its a good practice because we don’t know how the market will go in the future. When we ultimately trade our strategy it will be on live data as it evolves, not on the historical price data used for backtesting. Here’s how out-of-sample testing works:  First a • Read More »

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