If you’ve ever wondered:

• which MACD sell signal has the best track record
• whether to sell when the MACD Histogram ticks down or wait for the lines to cross
• how far positions have dropped after a MACD by signal
• whether stop losses really reduce risk
• whether using an ATR stop is worth the effort

then you might considering investing in a copy of the MACD Sell Signals BackTesting Report.

The MACD Sell Signal Report builds on two of the MACD Buy Signals to backtest basic exit signals using MACD lines and histograms. This report gives the first look at Maximum Adverse Excursion - how far the position went against you — as a way to measure the risk of each strategy.   It also compares three different types of stop losses to reduce risk.   Read this report to find out how you would have fared by following the MACD and MACD Histogram.

 Subscribe to BackTesting Report Now or order MACD Reports separately

Tags: ATR, backtesting, exit, linkedin, MACD, MACD Histogram, MAE, Maximum Adverse Excursion, risk, selling, stop

Updated June 03, 2009…this promotion has ended. Congratulations to Mike T. –  the winner of the drawing for a free subscription to BackTesting Report.   You can still get the chapter and more in the MACD Buy Signals BackTesting Report.

 This chapter is for you if…

• You’re not clear on the distinction between the common MACD Histogram and Appel’s Histogram.   Don’t worry, you’re not alone. The two different ways of plotting the MACD Histogram confused many people, even experts — see earlier posts for a few examples.  
• You just want to brush up on the MACD, how its plotted and what signals it gives.
• You want to see a little bit of what’s inside a BackTesting Report.  The MACD Buy Signals Report sells for $37 but this chapter is yours free.

Enter Drawing to Win a 12-Issue Subscription to BackTesting Report

 After you download and read the free chapter of the report above, leave a comment on this post to enter the drawing.     If you’ve never commented on a blog before, you just click the comment link at the top of this post and scroll to the bottom to find a form to enter your comment.

On June 3, 2009 at the LA Trader’s Expo, I’ll randomly select a comment and that person will receive a 12-issue subscription to BackTesting Report, a $127 value.  You do need to download the report to enter because comment spam is so prevalent that we have to cross-check the comments with the mailing list.You don’t need to be at the Trader’s Expo to win. 

(Updated from 5/11 and reposted on 5/15 due to technical difficulties.  If you sent a comment before 5/15, please resend.)

Tags: free report, linkedin, MACD, MACD Histogram

StockFinder® may be my new favorite tool, but its not without quirks. While creating custom indicators, scans and layouts for BackTesting Report subscribers, I came across its shortcomings with the MACD.   The screenshot above shows a StockFinder layout with 2 MACD of different parameter settings.  The candlesticks on the price chart are color-coded green for buy signals, red for sell signals by one MACD strategy, and blue for a different MACD strategy’s sell signals.

The two main problems with StockFinder’s built-in MACDs are:

1. When you insert a MACD or MACD Histogram, they come up with simple moving averages by default instead of the standard exponential moving averages.  You need to click on them and on the right of the edit menu, change from simple to exponential moving averages. 

2.  If you change the parameter settings, say from 12-26-9 to 19-39-9, the MACD signal line still does a 9-bar moving average of the default 12-26 MACD line.   You need to delete the signal line and recreate it as a 9-bar exponential moving average of the current MACD line.

StockFinder also takes a few extra clicks to get the MACD lines and MACD Histogram in the same pane.  They need to be added individually and take up too much space if left in separate panes.

StockFinder doesn’t come with Appel’s Histogram but I found it very easy to add as a custom indicator in StockFinder’s Real Code.   For example see the StockFinder screenshot below, which shows Appel’s Histogram in an implementation of a MACD strategy excerpt from Gerald Appel’s Technical Analysis Power Tools for Active Investors.

In conclusion, StockFinder can do useful and powerful things but be sure to tweak the settings if you put a MACD on its charts.

Tags: Appels Histogram, MACD, MACD Histogram, Stockfinder

July 13, 2009:  BestFreeCharts.com is renamed to FreeStockCharts.com and this post has been updated accordingly.

FreeStockCharts.com makes nifty charts like StockFinder.

Click here for a quick little set of instructions for plotting the MACD and MACD Histogram on FreeStockCharts.com

Overall, I found FreeStockCharts.com very straightforward to use.   It is limited to the basic charting but offers real-time data from BATS.    The interface is very similar to StockFinder, which I like, but the free tool doesn’t have the scanner, backtester, custom indicators, and industry groups which make the paid tool extremely useful.

Tags: BestFreeCharts, MACD, MACD Histogram, Stockfinder

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, charting websites and software 3. Suggestions on circumstances to slow down and sometimes skip MACD sell signals Experienced traders may spot the differences between Appel’s approach in this book and what is often bandied about regarding the MACD. I think it would have been even more helpful if the author had addressed the differences and pointed out any common misconceptions directly. Having done some backtesting of the MACD, I think the book needs more specific, objective details on how to anticipate MACD lines crossing and recommendations for using the MACD histogram or Appel’s histogram, as I have come to call his way of plotting it. I reckon that reading the book years ago and thoroughly understanding the nuances of how Gerald Appel uses the MACD would have helped me, especially in 2007. Since then, I’ve seen the value of backtesting. The good news is that many sections of this book show historical test results. However, I was a little disappointed not to find backtesting results for the MACD in this book. Test data is rarely included in trading texts so it is probably a bonus to get the data that is presented in this book. The author emphasizes synergy and gives specific instructions for using other market-timing power tools — along with the MACD and sometimes even without the MACD. In fact, the MACD is only one chapter. But MACD is why I came to the book and I suspect many other readers do the same, so that’s where I focused most of this review. Besides the MACD, the book has instructions on key indicators of market internals and health. It also gives rules of thumb for estimating duration and extent of market moves, using chart patterns, and it covers moving average channels. Bottom line: Worth reading to get the benefit of the experience of Gerald Appel, the man who invented the MACD and has seen a lot more than the current boom/bust cycle.

(Backtesting Blog is an Amazon Associate.)

Tags: backtesting, Gerald Appel, indicator, MACD

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 it to the inventor of MACD, Gerald Appel. Here’s what he said:

“You do seem to have come pretty much to the same conclusions that our research staff has. Most of what you see regarding MACD was arrived at before 1990 by which time I was already advising audiences not to await crossings.”

Mr. Appel is the president of Signalert with hundreds of millions in assets under management, and he has a research staff. If you don’t have quite those resources - or even if you do - you might consider a small investment in an easy-to-read research report.

When you read the MACD Buy Signals Report, you will get an idea how much it cost US stock market participants who waited for MACD lines to cross before buying a stock. Not only that, you will be clued in to a second costly mistake, this time with the MACD Histogram. This one is so widespread, you’ll run into it even on Yahoo Finance charts.

Finally, you get critical data to decide how best to use MACD for your own gain.

Click here to order your report today

Tags: backtesting report, indicator, linkedin, MACD, MACD Histogram, macdh