MACD and Stochastic Strategies

Combining MACD Crossover & Stochastic Cross-over Strategy Method.

Stochastic crossover can be combined with MACD crossover indicator to form a strategy.

• Stochastic Crossover
• MACD Crossover

Example MACD Crossover & Stochastic Cross-over Strategy Method

MACD and Stochastic Crossover Methods

From our Moving Averages Crossover, and MACD Crossover Indices Strategy - sell stock signal is generated when:

1. Stochastic oscillator crossover & start heading downwards
2. MACD indicator generates a cross over and MACD moves downward below center-line zero mark

The sell stock signal was generated when all these indices crossover rules were met. The exit signal is generated when a crossover trade signal in opposite direction is generated.

A buy signal would be generated using Stochastic Cross-over and MACD Crossover Indices Strategy - buy signal is generated when:

1. Both Stochastics crossover & begin heading up
2. MACD indicator generates a cross over and MACD moves upward above the center-line zero mark

The buy signal would be generated when all these indices crossover rules are met. The exit signal is generated when a crossover trade signal in opposite direction is generated.

Good thing about using such a strategy - MACD and Stochastics Strategy - is that a trader will be using different types of indicators to confirm the signals & avoid many indices whipsaws in the process.

• Stochastic Oscillator Technical Indicator - is a momentum oscillator indicator
• MACD - is a trend following indicator

It is very important to combine more than one indicator when coming up with a strategy, as a combination of trade signals is better than relying on just a one indicator. The indicator combinations reinforce each other's indices cross over signals, & cancel out false whipsaws crossover trade signals.

A trend following indicator helps a trader to analyze overall indices market trend, while at the same time using more than one technical indicator gives better and more reliable entry and exit crossover stock trade signals.

Stochastic Cross-over & MACD Crossover Day Strategy - Stochastic Cross-over and MACD Crossover Strategy PDF

Example 2 - MACD Crossover and Stochastic Cross-over Strategy - MACD Crossover and Stochastic Cross-over Strategy Method

MACD Crossover & Stochastic Cross-over Strategy - MACD Crossover and Stochastic Cross-over Strategy Method

For this example the trend direction is upwards, but at some point there were a few whipsaw signals generated by the stochastic oscillator - and question is how can a trader avoid these indices whipsaws?

To avoid whipsaws combine two or more indicator signals - such as MACD Crossover signal to help avoid crossover whipsaws, for example the MACD indicator had not given a crossover signal although MACD indicator was very close to the zero center-line level.

One indices tip is that as long as MACD indicator is above zero center line mark even if the MACD indicator lines are heading downwards then the trend is still upwards. As shown on the example above - MACD indicator did not go below the zero center line MACD level and after this the upward trend continued & MACD indicator was above the zero line mark & the market trend direction continued to move upwards.