Skill: Using the MACD

Effectively
Presented by Trevor Neil MCSI MSTA

trevor.neil@betagroup.co.uk

www.betagroup.co.uk
Coming Up:
For a free information sheet to accompany this webinar please send your details to
info@betagroup.co.uk
Please visit www.betagroup.co.uk for details of future BETA Group and courses given
by given by Trevor Neil. See the BETA Group calendar on the website.
www.betagroup.co.uk/courses
Trevor Neil’s Technical Analysis Surgery
November 16th and 19th
A Quantitive Approach to Support and
Resistance
In this session, we will look deeply into the formation of Support and Resistance levels.
These are difficult to quantify and test and to understand how they can be systematically
merged with other technical approaches. We will look at support and resistance viewed
and measured in a way you will never have seen before. You will see the results of tens
of thousands of man-hours of research an development. Beware: The concepts in this
session are advanced and statistical.
December 10th
The Technical Year Ahead
Last year at this time, Trevor Neil made his annual technical forecasts. Mostly he was right, in
a couple of cases very right and ho humm. A much better track recording than 2016 where he
made one really wrong forecast. Despite it being so difficult and possibly pointless, Trevor will
make his technical forecasts for 2019. Send suggestions for markets to cover; other than
Stock Indices, the Dollar, Crude and Gold which he will definitely cover. Send your RIC codes
at trevor.neil@betagroup.co.uk

December 14th and 17th

A Better Way to Measure the Trend Part 1
Systematic traders know the importance of using the right technical tool at the right time. When
conditions are trendy a set of indicators work well and others do not. When the action is
trendless and choppy other mean reverting tools work best and trend following is painful. Many
of us know and use Wilder's Average Directional Index. Experience tells is it can be slow to
identify trend, especially following a range break out. In this session and in Part 2 which will be
in January Trevor will look at the ADX in depth and how to interpret it. The Wilder way (with all
due respect to the Master) ius not good enough. In Part 2 Trevor will look and compare
alternatives: Perry Kaufman's Efficiency Ratio, Adam White's Vertical Horizontal Filter and the
statistician's R-Squared linear regression measure
Taken from Trevor Neil’s course: Technical Analysis in the Dealing
Room - Intro

SKILL: USING THE MACD

EFFECTIVELY
MACD Weekly AUD
The MACD

◼ Moving Average Convergence-

Divergence
◼ Gerald Appel
◼ Calculation and defaults
◼ Interpretation
◼ MACD message problems
◼ It is a tool with a purpose
Technical Analysis - Power Tools for Active
Investors Gerald Appel 2005 Pearson
MACD Calculations and Defaults
1. Calculate a 12-period EMA of price for the chosen time period.
2. Calculate a 26-period EMA of price for the chosen time period.
3. Subtract the 26-period EMA from the 12-period EMA.
4. Calculate a nine-period EMA of the result obtained from step 3.

◼ This nine-period EMA line is overlaid on a histogram that is created by

subtracting the nine-period EMA from the result in step 3, which is called
the MACD line, but it is not always visibly plotted on the MACD
representation on a chart.
◼ The MACD also has a zero line to indicate positive and negative values.
The MACD has a positive value whenever the 12-period EMA is above the
26-period EMA and a negative value when the 12-period EMA is below
the 26-period EMA.
◼ Better parameters?
MACD Messages

◼ Crossing
◼ Hight
◼ The significance of zero
◼ Convergence
◼ Divergence
◼ Interpretation problems
Building the MACD
Building the MACD
EMA Diff as an Oscillator
EMA Oscillator with EMA = MACD
MACD Weekly AUD
MACD Weekly AUD
Covergence Divergence

Convergence

Divergence
Problem 1

Flat trading after a trend

shows as a signal
Problem 2
A compromise between timing &
accuracy
Which oscillator get it right
and which often get is
wrong? Which is early or
late?
Timing Accuracy
Moving
Averages

DMI

Bollinger
RSI Bands/Supp
Res/Candles
Stochastic ticks
A compromise between timing &
accuracy
Which oscillator get it right
and which often get is
wrong? Which is early or
late?
Timing Accuracy
Moving
Averages

DMI

Bollinger
RSI Bands/Supp MACD
Res/Candles
Stochastic ticks
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