[Brand]

Great site!....Opinion: Buy& Sell points.... I'm using 5/20 ema cross with a MACD weekly cross to buy & sell. The MACD must fire off first then the 5/20ema cross......Thoughts?

[David Waring]

Hi Brand,

Thanks for the comment I am glad you like the site. I also enjoy it when people post their methodologies for discussion. Before commenting one way or the other would you mind giving us a little more insight into what timeframe you are trading this on and what is the rationale behind using the moving averages you chose in conjunction with the MACD?

Thanks
Dave

[Brand]

I'm in the trade for as long as there has been no 5/20 ema cross over to exit. As far as the weekly MACD cross, you can look at just about any chart of stocks and ETF's and there is a great buy and sell signal right at the cross.The slow STOCH seems to break first then the MACD then the 5/20 ema cross is the signal to buy or sell.I will risk no more than 2% of my total account. Here is a good example:WWE - SharpCharts from StockCharts.com

[David Waring]

Originally Posted by Brand

I'm in the trade for as long as there has been no 5/20 ema cross over to exit. As far as the weekly MACD cross, you can look at just about any chart of stocks and ETF's and there is a great buy and sell signal right at the cross.The slow STOCH seems to break first then the MACD then the 5/20 ema cross is the signal to buy or sell.I will risk no more than 2% of my total account.

Sounds good. It sounds like you are using this on longer term charts to ride trends which in my opinion is what moving averages and the MACD work best for. I have never traded this particular strategy however one thing to consider is that both the indicators are essentially moving averages. You mention the stochastic in the above post are you using that to confirm as well?

Best Regards,
Dave

[Brand]

I found this in my notes: One of the primary benefits of MACD is that it
incorporates aspects of both momentum and trend in one
indicator. As a trend-following indicator, it will not
be wrong for very long. The use of moving averages
ensures that the indicator will eventually follow the
movements of the underlying security. By using
Exponential Moving Averages (EMAs), as opposed to
Simple Moving Averages (SMAs), some of the lag has
been taken out.

As a momentum indicator, MACD has the ability to
foreshadow moves in the underlying security. MACD
divergences can be key factors in predicting a trend
change. A Negative Divergence signals that bullish
momentum is waning, and there could be a potential
change in trend from bullish to bearish. This can
serve as an alert for traders to take some profits in
long positions, or for aggressive traders to consider
initiating a short position.

MACD can be applied to daily, weekly or monthly
charts. MACD represents the convergence and divergence
of two moving averages. The standard setting for MACD
is the difference between the 12 and 26-period EMA.
However, any combination of moving averages can be
used. The set of moving averages used in MACD can be
tailored for each individual security. For weekly
charts, a faster set of moving averages may be
appropriate. For volatile stocks, slower moving
averages may be needed to help smooth the data. Given
that level of flexibility, each individual should
adjust the MACD to suit his or her own trading style,
objectives and risk tolerance.