What Is Better Than MACD?
MACD is the most
popular Retail Trader stock indicator, however it often lags price due to the
fact that it is based on moving averages. There is a way to improve the use of
MACD for earlier signals and entries to increase profits and lower risk. The
Retail Trader group includes those who have learned how to trade the Stock
Market from home.
As a Price and Time
Momentum Indicator, MACD is missing one of the Primary DATA streams that is
recorded for every stock transaction. This missing Data is what causes MACD to
lag and give false positive or false negative signals during sideways trending
price action. When the missing data of Quantity is included in the analysis,
MACD Users are able to see the more subtle patterns of MACD and are able to
enter the stock before the run begins.
Go to the Learning
Center and watch the MACD Indicator Training Webinar and learn how to improve
MACD for the current markets.
This is a huge bonus
for Swing Traders, Momentum Traders, Day Traders and other short-term trading
styles. The missing data of Quantity is a key element of Professional Trading
analysis, and is why Professional Traders earn so much more profit per trade
than Retail Traders.
By incorporating this
one additional piece of data, StockCharts.com Users will find more opportunities
to trade and will be trading with the Professional Traders more often, rather
than trading against this large-lot Market Participant Group.
Did you know that
most momentum runs are initiated by Professional Traders getting into a stock
early, as they have access to information sooner than it is available to the
Retail Trader. Also, the Professional Trader is an expert at routing their
orders to execute on a precise penny execution at the selected venue. This
makes their price patterns consistent, reliable, and rewarding for Retail
Traders. However just using MACD is insufficient to find the Professional
Traders buying activity because when they are buying quietly, they do not move
price enough to create a MACD signal, which comes later.
Go to the Learning
Center and watch the How to Trade the Stock Market Webinar.
The ChiOsc Indicator
provides the missing data that allows Retail Traders to see the MACD momentum
building, before the MACD crosses. By using these two indicators in
combination, Retail Traders can enter a stock earlier before the sudden
momentum run.
Below is a chart
example of how this works. ChiOsc with its Exponential Moving Average EMA turns
up and crosses a day ahead of MACD. This is the large-lot data that MACD is
missing. The ChiOsc indicator is revealing strong volume momentum energy that
has not yet altered price.
Below 
Summary
MACD can be enhanced
and improved by using indicators that include large-lot signal patterns. There
are several indicators within StockCharts.com that do reveal large-lot
professional traders activity before the stock moves with momentum. ChiOsc is
the indicator variation created by TechniTrader for StockCharts.com Users who
are our students.
Go to the Learning
Center and watch a wide variety of training webinars.
Go
to the TechniTrader
TechniTrader
The Gold
Standard in Stock Market Education
Martha Stokes CMT
TechniTrader technical analysis using StockCharts charts, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
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Disclaimer:
All statements are the opinions of TechniTrader, its instructors and/or
employees, and are not to be construed as anything more than an
opinion. TechniTrader is not a broker or an investment advisor; it is
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should not be assumed that the methods or techniques presented cannot
result in losses. Examples presented are for educational purposes only.