When just starting out, some beginning traders will want to use all of their available funds to trade rather than buying software and data feeds. In this article, we’ll look at how that can be done, using free end of day data and indicators.
After finding rules that work, many traders are tempted to optimize the parameters. This is easy to do, and is the beginning of the end of many solid trading plans.
By Alan Hull, AlanHull.com The MACD, Moving Average Convergence Divergence, indicator is probably the most popular indicator in use today. It is also one of the most misunderstood, with it often being described amongst chartists as ‘An average of an average’. Before we begin to dissect the MACD indicator it is necessary to mathematically define
The MACD oscillator developed by Gerald Appel uses two exponential moving averages of closing prices. These are turned into a momentum oscillator by subtracting the longer moving average from the shorter moving average. This is the faster line you see on the chart. The slower line, called the signal line is a 9 period exponentially
Technical analysis to predict price action in the financial markets is just another factor used to put the odds in favor of the trader. But relying on any single indicator to provide signals for a trade is not advisable. Since indicators derived from price action are lagging indicators, they confirm a signal only after the move has been initiated.