StockFetcher Forums · Filter Exchange · Building MACD filters<< >>Post Follow-up
murknd
62 posts
msg #27226
Ignore murknd
7/6/2003 12:14:02 AM

I've used the following filters with pretty good success (for swing trading - see my "level-set" post in general discussion) recently - again, the filters don't "magically" reveal winners every time, so you have to couple them with chart-reading. I also try to watch pre-market and pretty reliably the stocks that are trading and bidding up in pre-market usually do well 1-3 days - especially through the 1-2 days following a MACD xover.

Here's my logic ...

MACD xover is a very reliable signal in virtually any market - those that have a steeper slope of the MACD histogram are even more so (reliable) - so the basic filter is ...

Fetcher[MACD fast line(12,26) crossed above MACD slow line(12,26)]



... the bullish signal is even stronger when the fast line is increasing (rather than when the slow line is decreasing - although the slow line may very well still be decreasing at the xover point). So I add this to the basic xover and get ...

Fetcher[MACD fast line(12,26) crossed above MACD slow line(12,26) and MACD(12,26) has been increasing for 2 days]



... the next obvious thing is that the histogram has to be increasing in order for there to be a xover. I like to see the histogram increasing (that is getting less and less negative) for 3 days and the fast line increasing for 2 days. This helps filter out stocks that are acting more volatile above / below MACD xover. So now I get ...

Fetcher[MACD fast line(12,26) crossed above MACD slow line(12,26) and MACD histogram has been increasing for 3 days and MACD(12,26) has been increasing for 2 days]



Now imagine if you could filter for xover's 1 or 2 or 3 days prior to the xover. Not only do you potentially increase your probability for gains, but you have a "rolling" watch list.

I've experimented with a number of variations on this theme and you can (should) do the same, but typically the MACD histogram will reverse (i.e. a bottom) 1-2 days before the fast line reverses (forms a bottom). If you see a histogram "bottom" it will be followed by a fast line bottom (if the stock is really forming a bottom). Here's what these filters look like .. first the MACD Histogram bottom ...

Fetcher[MACD Histogram is decreasing for 4 days lag 1 day and MACD Histogram is increasing for 1 day]



... I like to add a histogram value qualifier (to filter out stocks that are many days to weeks away from a xover) and I get ...

Fetcher[MACD Histogram is decreasing for 4 days lag 1 day and MACD Histogram is between -0.14 and 0 and MACD Histogram is increasing for 1 day]



... now adding the MACD fast line increasing (recall the histogram is already increasing) so I get ...

Fetcher[MACD(12,26) is decreasing for 4 days lag 1 days and MACD(12,26) is increasing for 1 days and MACD Histogram is between -0.12 and 0 and MACD histogram is increasing for 2 days]



... the logic here again is that the histogram will bottom first, followed by a fast line bottom and then the histogram will approach zero from below.

I've tried to put these 2 concepts together and got this ...

Fetcher[MACD Histogram has been decreasing for 4 days lag 4 days and MACD Histogram is between -0.10 and 0 and MACD Histogram has been increasing for 2 days and MACD (12,26) has been decreasing for 4 days lag 3 days and MACD(12,26) has been increasing for 1 day]



MACD is a trend indicator so I also like to couple it with an oscillator like Fast Stochastic so I add (or chain) the following to all the filters above because I like to sort for those that have definitely formed a bottom and are now cycling back up ...

Fetcher[fast stochastic(15,3) fast %K is above 30 and fast stochastic(15,3) fast %K is increasing for 2 days]



... using a level of 30 once both the histogram and fast line have bottomed, and a level of 20 if I'm just looking for a bottom on the histogram.

I also use the following (mostly from posts on this forum - thank-you) as validation to help "narrow the field" ...

Fetcher[Williams %R (25) crossed above -40.00 within the last 1 day]



Fetcher[linear regression slope(10) crossed above 0]



Fetcher[RSI(2) crossed below 10% within the last 5 days and RSI(2) crossed above 10%]



Fetcher[MA(3) crossed above MA(8)]



I also use the following global filter ...

Fetcher[close is between 0.7 and 12 and volume is above volume 1 day ago and volume is above 100000 and sector is technology]



I usually end up developing a daily watch list of 10-20 stocks (once I've studied the charts) that pretty reliably include some nice (~5%) winners every day - do I pick those winners everyday? - of course not or I would be trading for a living - but I think this is a pretty logical system for those that swing trade and can't watch the market 24/7.

I'd appreciate any in-sights (constructive criticism welcome) you more experienced traders / analysts could give to tweak these concepts for various market conditions.

D



ig0r
51 posts
msg #27228
Ignore ig0r
7/6/2003 12:18:50 AM

Your logic sounds good, can you post the full filter you are using right now?


murknd
62 posts
msg #27229
Ignore murknd
7/6/2003 12:31:35 AM

... just remember they have many "personalized" (I like technology, I like price between 0.7 and 12, etc., etc.) components ... and I don't use them solely by themselves - I use them in combination with others in my previous post ... but here's the complete filters (actually 2 - they are similar, but give slightly different results and if you look at the histogram it's hard to argue it's not trending up and "looks as if it will xover in the next few days") ...

Fetcher[MACD Histogram has been decreasing for 4 days lag 4 days and MACD Histogram is between -0.10 and 0 and MACD Histogram has been increasing for 2 days and MACD(12,26) has been decreasing for 4 days lag 3 days and MACD(12,26) has been increasing for 1 days and fast stochastic(15,3) fast %K is above 30 and fast stochastic(15,3) fast %K is increasing for 2 days and close is between 0.7 and 12 and volume is above volume 1 day ago and volume is above 100000 and sector is technology]



Fetcher[MACD(12,26) is decreasing for 4 days lag 1 days and MACD(12,26) is increasing for 1 days and MACD Histogram is between -0.12 and 0 and MACD histogram is increasing for 2 days and fast stochastic(15,3) fast %K is above 15 and fast stochastic(15,3) fast %K is increasing for 2 days and close is between 0.7 and 12 and volume is above volume 1 day ago and volume is above 100000 and sector is technology]



D




adrianf
49 posts
msg #27233
Ignore adrianf
7/6/2003 10:07:35 AM

Thank you murknd for a wonderful well written formatted post.

I wish others here would write their posts in such a proffessional manner.






holygrail
72 posts
msg #27237
Ignore holygrail
7/6/2003 2:59:35 PM

For the record, this is NOT Holygrail. I am his trading buddy.

"proffessional"?

Sometimes, life is just too dang funny!


snappyfrog
40 posts
msg #135462
Ignore snappyfrog
4/16/2017 7:01:57 PM

Found this post. I like the way it is written and am going to try it on paper for a while. Any tweaks will be posted here. Anyone else using anything like this with success?

shillllihs
3,520 posts
msg #135468
Ignore shillllihs
modified
4/17/2017 12:31:09 PM

And as we all know, holy grail and his trading buddies went on to buy several islands in the pacific.
We should do a where are they now. These guys disappeared in the midst of the big crash of 2008 so one should be wary amongst all the fluff and pageantry.

snappyfrog
40 posts
msg #135699
Ignore snappyfrog
4/30/2017 6:44:41 PM

Yes, but there are a lot of nuggets to be found and tweaked. I am always looking for new ways to trade and ideas to try. You can't rely on others, take what you find and be responsible for only yourself.

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