Understanding MACD
Item Number: 3350-E
Date Published: 2008
Publisher: Traders Press, Inc.
Format: eBook
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Price: 24.95
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Author(s):
 Gerald Appel
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Gerald Appel is a world famous author and lecturer. A frequent guest on television and radio, he has appeared on Wall Street Week with Louis Ruykeyser and his articles and/or articles about him have appeared in Money Magazine, Barron’s, Technical Analysis of Stocks and Commodities Magazine, Stocks Futures and Options Magazine, Wealth Magazine, the New York Times, Forbes, Kiplinger’s Magazine, and elsewhere. He is the founder of Signalert Corporation, an investment advisory firm that manages more than $300 million in client assets and is the author of numerous books and articles regarding investment strategies, including Technical Analysis: Power Tools for the Active Investor (Financial Times Prentice Hall, 2005).
 Edward D. Dobson
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Edward Dobson was born in California and raised in South Carolina. At age 12, his father instilled in him an interest for investing in stocks. This became a life long passion, which came to encompass trading in securities, options and futures.
After college and military duty, he was a broker with Smith Barney and Paine Webber for 23 years, specializing in options and futures. In 1992, he left the brokerage business to devote full time to his publishing business, Traders Press (founded in 1975), and to trading. He is currently an active trader and still active in his business.
Edward Dobson
is the president and sole owner of Traders Press, Inc. You can read more about
him in the History of Traders Press.
Synopsis:
E-Book Edition
Are You an MACD Expert Yet? If not, you can be soon! Our latest publication is the definitive reference on this widely followed yet little understood technical indicator.
Description:
Click here for Softcover Edition
MACD (Moving Average Convergence-Divergence) is a highly effective and practical trend-following indicator which is widely available on most technical analysis software programs. Traders and investors with this indicator at their disposal would be well advised to learn as much as they can about it and how to use it to improve their trade timing and selection.
This comprehensive guide to MACD is a one-of-a-kind one-stop reference that will prove a valuable addition your trading library. It includes a bullet point summary overview of MACD, a detailed bibliography detailing all known references and articles relating to MACD, with annotation showing unique points covered in each source, and a major research report on MACD written by and originally published by Gerald Appel (and priced at $50 for this report alone). This report, written by the originator of this indicator, is the most definitive and in-depth material available on MACD. It alone is worth far more than the modest price of this booklet.
Publisher’s Foreword
I first learned about MACD (Moving Average Convergence-Divergence) in the early 1980’s, shortly after Gerald Appel published his groundbreaking research report which “revealed” this new technical indicator. In 1986, he updated and expanded his original report, and shared with the reader how he used and interpreted it in his own market analysis. This updated report, reproduced in its entirety, is the heart of this work, which is intended to give the reader a basic understanding and knowledge of MACD and how to use it effectively in market analysis and timing. It is my belief that the most effective way to achieve this goal is to hear it straight from the “master” on the subject.
The idea for this book came about years ago one night when my old friend Gerald and I were having dinner with our mutual friend Alex Elder in Chicago. It has been a long time in the making since then. Originally, Gerald felt that the original manuscript and charts would need to be updated with current examples and commentary. He didn’t even have a copy of the report, which had gone out of print and was no longer available. After a diligent search I was able to locate an old used copy, which was forwarded to him to be updated and revised. Surprisingly, after looking it over closely (this being some 20 years after it was written), he advised that he felt it was “OK” as it was, and needed no updating. I feel that this attests to the fact that markets, over time, no not really “change”, and some indicators and principles stand the “test of time” and are just as valid today as they were decades ago. In terms familiar to systems developers, they are “robust”.My special thanks to Shelley Mitchell, whose painstaking research and diligent effort produced the listing of articles and annotated bibliography which add a valuable dimension to this work.
It is my hope that this reprinted material, along with the annotated bibliography of articles and references and a few brief comments of my own, will prove helpful to you in your pursuit of trading excellence.
Introduction
There has long been a need for this booklet. MACD (Moving Average Convergence-Divergence has long been one of the most popular and widely available technical indicators since it was developed by Gerald Appel in the late 1970’s. However, since Appel’s last published research on the subject, published in 1986, went of out print and was no longer available, there has been no work solely dedicated to this topic. There are a number of excellent books which contain discussion and explanation of MACD, but only in passing and not in depth. Research of all past literature dealing with MACD shows that Appel’s own in-depth work on the subject is the best resource for learning and mastering the use of this indicator….thus, this work is reprinted herein in its entirety. As explained in the Foreword, though this material is over twenty years old, it is still as relevant and applicable today as when it was originally written.
Those interested in furthering their knowledge of MACD are encouraged to take special note of the articles listed herein, and of the references in other works in the bibliography. The most notable of these works is Appel’s own “Technical Analysis: Power Tools for Investors”, which has a major section and treatment of MACD, and which was recently published in 2005. This book is a valuable reference and resource for serious traders and investors.
Of all the many technical indicators and studies available today in technical analysis software, it is my belief that MACD is one of the most helpful and reliable. An old acquaintance of mine, who spent literally thousands of hours over a period of years studying various technical indicators, eventually came to the conclusion that the only two indicators truly worth using were ADX and MACD, applied over multiple time frames simultaneously.
The MACD histogram, which shows the difference between the two MACD lines, was preferred over the two lines themselves. When this histogram crosses the zero line in either direction, it shows a crossing of the two lines. When the histogram reading peaks and turns up or down, indicating that the differential between the lines has run out of momentum and begun to decrease, is an early signal that occurs well before an actual crossing of the lines. My acquaintance used this occurrence as one of the main components of a trading methodology (coupled with ADX readings). I first became aware of the use of the MACD histogram in the late 1980’s, when my friend Alex Elder used and discussed it extensively in a market letter he published at that time. Another reference I highly recommend for discussion of MACD and the Histogram is the relevant section in Elder’s classic “Trading for a Living”, one of the best and most helpful trading books ever written, in my opinion.
Table of Contents:
- Publisher’s Foreword
- Introduction
- Key Points
- MACD Report
- The Basic Structure of MACD
- Introducing the Signal Line
- The Basic Buy and Sell Signals
- Using Divergences to Recognize the Most Reliable Signals
- Comparing MACD to a Price Momentum Oscillator
- Comparing MACD to the Relative Strength Indicator
- Combining Two MACD Combinations for More Accurate Signals
- MACD During a Strongly Uptrending Period
- MACD During a Strongly Downtrending Period
- Stop Losses for Unsuccessful Trades
- Using Trendlines to Confirm Signals
- Long Term MACD Signals
- Using Monthly MACD
- MACD As A Day Trading Tool
- Using Time Cycles with MACD
- When MACD Does Not Provide Timely Signals
- Amazing Ability of MACD to Catch the Ends of Significant Declines
- MACD and the 5-Minute Tick Chart
- MACD and the 71 Day Market Cycle
- Shifting Your Sell Parameters Because of Divergence
- A Difficult Climate for MACD
- Computing and Maintaining Exponential Moving Averages
- Summary of MACD Procedures
- Sell Procedures
- Bibliography
- Articles: Techncial Analysis of Stocks and Commodities
- Active Trader
- Books: Annotated Bibliography
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