Sunday, December 18, 2011 10:08:20 AM
Here is a simple trading system for the overall market using the Full Stochastics and MACD Histogram indicators -
Criteria for a buy signal -
1) The Full Sto indicator has to fall to or below 20.
2) Then wait for the black Full Sto line to touch its red signal line.
3) Then watch for the first day that the blue columns of the MACD Histogram either stop getting longer, or start getting smaller. That is your buy signal.
Based on that day's intraday price action, you may be able to tell that the blue MACD column is going to be shorter that day, and thus not have to wait for the close for your buy signal. Using the MACD Histo indicator as the final buy criteria will prevent getting into a falling market too early (see early Aug 2011, where if using only Full Sto signals, you would buy in way too early).
A sell signal is the reverse of the above, with the Full Sto having to be at or above 80 -
Criteria for a buy signal -
1) The Full Sto indicator has to fall to or below 20.
2) Then wait for the black Full Sto line to touch its red signal line.
3) Then watch for the first day that the blue columns of the MACD Histogram either stop getting longer, or start getting smaller. That is your buy signal.
Based on that day's intraday price action, you may be able to tell that the blue MACD column is going to be shorter that day, and thus not have to wait for the close for your buy signal. Using the MACD Histo indicator as the final buy criteria will prevent getting into a falling market too early (see early Aug 2011, where if using only Full Sto signals, you would buy in way too early).
A sell signal is the reverse of the above, with the Full Sto having to be at or above 80 -
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