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Old 13-09-2015, 11:33 PM
abhishek_300 abhishek_300 is offline
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Default MACD Fake Signal how to improve it

I have been monitoring the MACD Signal on a 30 min chart. The MACD setting is 9,13,9. However all the buy signal entry are then hit by the stop loss. How can I improve this setting,or do i have to change my time frame or do i have to add some other more indicators to support it. Below is the link for the video which shows how the stop loss are hit after the MACD buy signal is triggered.
https://www.youtube.com/watch?v=GLoU8OjTjgc
Please provide me your inpurts to improve this signal. Thanks
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Old 14-09-2015, 12:29 AM
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Dear Abhishek,

Not All signals result in good trades. Hitting a stoploss is part of the trades. Factors such as sudden price changes due to news etc. also can trigger stop loss.

Coming to your problem, you have to improve the Buy condition with additional filter. In the video you have given, all your Buy signals were correct as per MACD but the candle following the signal candle did not close above the high of Signal candle. So, add a filter to your Buy criterion such that a Buy is confirmed only if the next candle closes above high of Signal candle. Although this will not be a 100% guaranteed strategy, it definitely reduces the frequency of Stop losses but your entry is delayed by one more candle implying lesser profit (You entry price will be higher).

Even changing and optimising the parameters can help in reducing the problem of frequent stop loss hits.

-Anant

Last edited by asnavale; 14-09-2015 at 12:58 AM. Reason: Spelling corrected.
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Old 14-09-2015, 09:09 AM
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MACD is best treated as Trend Following picker not the counter trending trade. This is the mistake in your specified video to attempt this in counter trending.
Just change the view and pick the short trade on crossover of MACD and its average , all short trade are profitable.

So it does not mean that MACD can't be used to pick counter trending signal, but that need specific conditions to be right. I can give eaxmple after market.

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Old 14-09-2015, 10:15 AM
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One basic criteria must be adopted in every situation. whether picking trade in trending or counter trending, with every type of such indicators, that

What the Trend Candles are doing in lookback period of Slow MA ( in case of MACD here its 13 ) ?

If trend candle support the trade then take it else avoid.
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Old 14-09-2015, 12:42 PM
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It assumed that whoever comes to the trading arena, have decided to take some risk, nothing can mitigate the risk altogether, an intelligent trader has to decide which risks are acceptable and which are not, frequent stoploss hit is the characteristics of trend following indicators in a choppy market.One should try to improve upon the expectancy of the system, optimizing params wont work in all scenarios, neither excessive filters.Its a mixed sort of bag one has to apply,and it refines with ones trading realtime experience.one should ensure that the few big winners recover the small small losses and finally end the trading account in profit.IMO indicators at best is a confirming one not a leading one.my two cents.
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Old 16-09-2015, 11:33 PM
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Originally Posted by asnavale View Post
Dear Abhishek,

Not All signals result in good trades. Hitting a stoploss is part of the trades. Factors such as sudden price changes due to news etc. also can trigger stop loss.

Coming to your problem, you have to improve the Buy condition with additional filter. In the video you have given, all your Buy signals were correct as per MACD but the candle following the signal candle did not close above the high of Signal candle. So, add a filter to your Buy criterion such that a Buy is confirmed only if the next candle closes above high of Signal candle. Although this will not be a 100% guaranteed strategy, it definitely reduces the frequency of Stop losses but your entry is delayed by one more candle implying lesser profit (You entry price will be higher).

Even changing and optimising the parameters can help in reducing the problem of frequent stop loss hits.

-Anant

Thanks Asnavle for your feedback. I will implement and check those changes for this MACD signal
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Old 03-02-2016, 08:32 AM
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Originally Posted by abhishek_300 View Post
I have been monitoring the MACD Signal on a 30 min chart. The MACD setting is 9,13,9. However all the buy signal entry are then hit by the stop loss. How can I improve this setting,or do i have to change my time frame or do i have to add some other more indicators to support it. Below is the link for the video which shows how the stop loss are hit after the MACD buy signal is triggered.
https://www.youtube.com/watch?v=GLoU8OjTjgc
Please provide me your inpurts to improve this signal. Thanks

If u insist on looking at the tail instead of thr dog , u could look at the 2 hr tail and trade on the 30 min all the best.
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Old 09-02-2016, 08:28 AM
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Originally Posted by abhishek_300 View Post
Thanks Asnavle for your feedback. I will implement and check those changes for this MACD signal


This is how Warren Buffett uses MACD.
http://dragonflycap.com/2012/12/12/wed-night-2/

Also note that he doesnt use macd alone. He always couples RSI with macd..and has got different settings(parameters) for different scrips.
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