As more and more technical indicators become more taught, followed…and misunderstood I wanted

to geta contrarian view of the MACD. I asked Mark Young from ChartSmarts and Wall Street
Sentiment to do that for us. I’ve known Mark for a while and can attest to his knowledge so please
take some time and read the article below and comment as you see fit! You can also learn more
about MACD HERE.
===================================================================
Throughout my 28 year career as an investment professional, I’ve learned that you’ve got to do
things differently if you expect to beat the averages. More importantly, I’ve learned that one has to
separate oneself from the herd if one wants to avoid being trampled by them. As such, I’m always
looking for an edge to set my trading apart.
With that approach in mind, I’m going to risk being mistaken for an investment “guru” cliche’ and tell
you that I’ve got a secret “they” don’t want you to know: The most popular technical indicator
available today– is a fade.
Read more
Allow me to share with you this free mini-email trading course
Hello,
My name is Adam Hewison. You might want to Google Me to confirm what I am about to share with
you.
There are plenty of people out there that create “exclusive email courses” with little or no credentials
to actually backup their teachings. So, I think it’s right that I share a little bit about myself with you
before we even start.
I was a former floor trader on the IMM, IOM, NYFE and LIFFE as well as a risk manager of a large,
multinational corporation in Geneva, Switzerland. I also have written books on forex trading and
trend following. In 1995, I founded INO.com and later co-founded MarketClub. I’ve been in the
trading biz for over three decades and have seen it all. I created this course as a way to give back
and share trading tips and techniques that I still use in my trading today.
In my Free Mini Email Course, I will show and explain the tools and strategies you need to increase
your success rate in the marketplace.
Here’s just a small sampling of what you’ll learn in this course:

(1) The importance of psychology in price movement (2) How to spot mega trends (3) Understanding
of technical price objectives (4) How to picture price objectives (5) How to trade with moving
averages (6) How to use point and figure trading techniques (7) How to use the RSI indicator (8)
How to correctly use stochastics in your trading (9) How to use the ADX indicator to capture trends
(10) How to capitalize on natural market cycles.
Plus, you will you will learn all about fibonacci retracements, MACD, Bollinger Bands and much
more. Just fill out the form and we’ll get you started right away.
Every success,
Adam Hewison
President, INO.com & Co-Creator, MarketClub
Forex 1-2-3 Method
Let’s face it… Forex is a market that has HUGE potential, HUGE liquidity, and little good information
out there on how to trade it with success. That’s why I’ve asked Mark McRae from Forex Avenger to
come and teach us a bit about a 1-2-3 Method that his partner David Curran from Forex Avenger
has had major success with. Please take time, read the blog entry, and visit Forex Avenger to see
the success they have experienced trading forex!
====================================================================
This particular technique has been around for a long time and I first saw it used in the futures
market. Since then I have seen traders using it on just about every market and when applied well,
can give amazingly accurate entry levels.
Lets first start with the basic concept. During the course of any trend, either up or down, the market
will form little peaks and valleys. see the chart below:

The problem is, how do you know when to enter the market and where do you get out. This is where
the 1-2-3 method comes in. First let’s look at a typical 1-2-3 set up:
Nice and simple, but it still doesn’t tell us if we should take the trade. For this we add an indictor. You
could use just about any indicator with this method, but my preferred indicator is MACD with the
standard settings of 12,26,9. With the indicator added, it now looks like this:

Now here is where it gets interesting. The rules for the trade are as follows:
Uptrend
1. This works best as a reversal pattern, so identify a previous downtrend.
2. Wait for the MACD to signal a buy and for the 1-2-3 set up tobe in place.
3. As the market pulls back to point 3, the MACD should remain inbuy mode or just slightly dip
into sell.
4. Place a buy entry order 1 pip above point 2
5. Place a stop loss order 1 pip below point 3
6. Measure the distance between point 2 and 3 and project thatforward for your exit.
7. Point 3, should not be lower than point 1
The reverse is true for short trades. As the market progresses you can trail your stop to 1 pip below
the most recent low (Valley in an uptrend). You can also use a break in a trend line as an exit.
Some examples:

There are a lot of variations on the 1-2-3 setup but the basic concept is always the same. Try
experimenting with it on your favorite time frame.
Good Trading
Bio - Mark McRae is a fulltime professional trader, author and coach. He has coached some of the
top names in Forex trading. David Curran, Forex’s latest rising star attributes his success in the
Forex market to the teachings of Mark McRae. To read more about David, go HERE
Traders Toolbox: Moving Average Convergence / Divergence
(MACD)
MarketClub is known for our “Trade Triangle” technology. However, if you have used other technical
analysis indicators previously, you can use a combination of the studies and other techniques in
conjunction with the “Trade Triangles” to further confirm trends.
Developed by Gerald Appel, this indicator consists of two lines: a solid line called the MACD line and
a solid line called the signal line. The MACD line consists of two exponential moving averages, while
the signal line is composed of the MACD line smoothed by another exponential moving average.
To complete the standard calculation of the two lines, you must:
1. Calculate a 12-period exponential moving average of closing prices
2. Calculate a 26-period exponential moving average of closing prices
3. Plot the difference between the two calculations above as a solid line. This is your MACD line.
4. Calculate a nine-period exponential moving average of the MACD line and plot these results
as a dashed line. This is your signal line.
MarketClub will do the above calculations for you. The MACD line is represented by a red solid line
and the Signal line is represented by a green solid line. The default values for this study are set to
the suggest values listed above.
The most useful signals generated from this system occur when the solid red (MACD) line crosses
below the green solid line (Signal) and a sell signal occurs when it crosses above the signal line.

—
You can learn more about the MACD and Gerald Appel by visiting INO TV.

A Different Type of Moving Average Cross

September 11, 2008 · By Brad · Filed Under Guest Bloggers · 6 Comments

I’ve been trying to convince our next guest blogger to write for us since we first started these…but
he’s been way too busy. Well I FINALLY caught him and I think you’ll agree that it was worth the
wait. I’d like to introduce Mark McRae from Traders Secret Code. Mark has been a friend to INO and
MarketClub since 2001 and I can personally say that his insights and knowledge have become a
crucial point in my trading. His focus has been the same as Adam…teach a man to fish (trade) he’ll
eat (profit) for a lifetime. Now please enjoy Mark’s lesson on “A Different Type of Moving Average
Cross”.
====================================================================
Virtually every trader has dabbled with or experimented with some sort of moving average. What I
want to introduce you to in this lesson is a different sort of moving average cross method, which I
have found to be very good at identifying short term trend changes.
As we know a moving average is normally plotted using the close of a bar e.g. if you were plotting a
3 period moving average, then you would add the last three closes and divide the total by three to
get a simple moving average.
This is where I want you to think a little differently. I have always been an advocate of taking
traditional thinking and changing it around. What if you used the open instead of the close? What if
you used the close of one period of a moving average and the open of another?
First, most charting packages will allow you to use the open, high, low or close to plot a moving
average.
In the example below of the daily Dow Jones, I have used a 5 period exponential moving average of
the close and a 6 period exponential moving average of the open. As you can see it catches the
short term trend changes really nicely.

In the next example of the 1 hour EUR/USD, you can see that the close/open combination worked
really well. Of course you will go through periods of consolidation with any market and any moving
average method you use will be whipsawed. To get around this you need some sort of filter or
approach that helps you keep out of the low probability trades.
You could use ADX, Stochastic or MACD to help filter the noise but I also like to add a time frame.

In the next example of the 4 hour GBP/USD you can see that on the 24th September 04 at 4:00
there was a cross of the 5 period exponential moving average of the close above the 6 period
exponential moving average of the open. This signal has remained in place until today as I write on
the 27th September.
Although there was a signal on the 4 hour, to help identify even better entry points you can drop
down a few time frames to the 30 minute chart. As you can see from the 30 minute chart there have
been quite a few crosses of the 5 period exponential moving of the close above or below the 6
period exponential moving average of the open.

There are lots of ways to trade this but a neat little trick is to wait for the signal on a higher time
frame and then drop down a few time frames and wait for a pullback. The first signal after the
pullback on the lower time frame is normally a pretty good entry point e.g. If there were a cross up
on the large time frame then drop down to a lower time frame and wait for the market to retrace and
then give another buy signal (cross up). The opposite is true for short signals.
Once you get the signal on the shorter time frame depending on where support is you can usually
place your first stop loss under the nearest support area (valley). If the market begins to make
progress you can move your stop so that it trails the market by moving your stop to just under the
most recent support area.
In this lesson I have use an exponential moving average but experiment with different types of
average such as weighted, smoothed or simple. You can also experiment with different lengths of
moving average.
Good Trading.
Best Regards
Mark McRae
Traders Secret Code

“Saturday Seminars”- Trading the Short-Term Volatility

Breakout without a Mechanical System
August 30, 2008 · By Lindsay · Filed Under Saturday Seminars · 2 Comments

Mechanical systems do have merit, but after ten years of trading in the cash and energy markets
Michael became convinced that a discretionary approach was more suited to his personality and
gave him more consistent profits. In this seminar, Michael describes every aspect of the
discretionary methodology he developed for profiting from a short-term volatility breakout in futures
and equities markets.
Michael’s strategy employs numerous studies, but it assembles them in a logical and efficient
manner that is easily grasped. Using his techniques, Michael analyzes twelve futures markets and
ten equities in the two hours of this session. His methodology employs classic pattern recognition,
average true range, swing, Fibonacci support and resistance, MACD, ADX/DMI, price/volume/open
interest relationships, momentum, historic volatility, and the Commitment of Traders report.
Michael also discusses the full anatomy of a trade including entries, exits, setting stops, account
leverage, and money management. He presents actual trades in detail so that you gain a complete
understanding of his pragmatic, winning methodology. This session provides you with an enhanced
understanding of the markets, thereby improving profitability regardless of experience level or
trading style.

Before Michael Mazur began trading in the futures industry in 1994, he spent ten years as an
international cargo trader in the energy market. He traded for Mobil Oil, Mitsubishi, Salomon, and
Vitol SA, and he managed trading personnel and a trading portfolio that reached from the Arabian
Gulf through India to the Pacific Rim. His group sales ranged from $500 million to $1 billion annually.
Michael lives in Pacific Grove, California, where he operates M.J. Mazur, Inc., a registered
commodity trading advisor. Michael manages futures accounts, publishes M Trade, a daily trading
sheet, and provides consulting services to institutions and independent investors.
—
Saturday Seminars are just a taste of the power of INO TV. The web’s only online video and audio
library for trading education. So watch four videos in our free version of INO TV click here.

“Saturday Seminars” - Advanced Fibonacci Applications and the

Price Axis…
July 12, 2008 · By Lindsay · Filed Under Saturday Seminars, Trading Videos · 5 Comments

Advanced Fibonacci Applications and the Price Axis in the Forex, Stock Index, and Interest Rate
Futures.
Joe’s techniques result in significantly higher percentages of winning trades through more accurate
stop placement, market entry and profit objective location. Joe’s high-accuracy trading approach
depends on the proper mix of both leading (Fibonacci) and lagging indicators.
You will learn where and how to apply Fibonacci analysis. This context determines the real bottom-
line difference. Joe devotes a significant part of his lecture to trend analysis and directional
techniques using variations of Stochastics, MACD and displaced moving averages. Technical
analysis software packages can simulate all of these unique and specific variations through pre-
programmed studies or by inserting the formulas Joe provides for you.

Joe will explain the three categories of a winning futures trading plan:
 Management (Yourself & Your Capital)
 A Competent Trend & Direction Analysis Tool
 Proper Applications of Fibonacci Retracement & Objective Analysis

Joe DiNapoli is a veteran trader with over twenty-five years of solid market trading
experience. He is also a dogged and thorough researcher, an internationally recognized lecturer,
and a widely acclaimed author. Joe’s formal education was in electrical engineering and economics.
He received his informal education in “the Bunker,” an aptly named trading room packed full of
electronics and communications equipment. This is where most of Joe’s early research began. Joe
is one of today’s most sought-after experts for his exhaustive investigations into displaced moving
averages, his creation of the proprietary “Oscillator Predictor,” and in particular, his practical and
unique method of applying Fibonacci ratios to the price axis. A registered CTA, Joe has taught his
techniques in the major financial capitals of Europe and Asia, as well as in the United States. His
articles have appeared in a wide variety of technical publications across the nation and worldwide. In
1996 alone, Joe taught capacity audiences in twenty-three financial centers around the globe. Joe
was a contributing author to High Performance Futures Trading: Power Lessons From the Masters,
selected 1990 book of the year by Super Trader’s Almanac. He also wrote the Fibonacci Money
Management and Trend Analysis In-Home Trading Course, which has been lauded by professional
and novice traders alike. Joe published his newest and most complete work, DiNapoli Levels, in
1997. The book has been hailed by Futures Truth as “one of the best new technical books to come
along in a long time.” When Chuck LeBeau (Technical Traders Bulletin) asked his readers for names
of successful traders they wanted to see interviewed, Joe DiNapoli’s name came up more often than
any other. The Atlanta Constitution cited Joe’s work by referring to the “magical power” of Fibonacci
ratios in the marketplace. Joe has often made use of this magic to make both startling and uncannily
accurate market predictions, particularly in stock market indexes and interest rate futures. As the
president of Coast Investment Software, Inc., located on Siesta Key in Sarasota, Florida, Joe
continues to develop and deploy “high accuracy” trading methods, using a combination of leading
and lagging indicators in unique and innovative ways. He conducts a limited number of private
tutorials each year at his trading room and he also makes his trading approach available to others
via software and trading course materials.
—

Using Ratio Charts to Gain an Edge

Today’s guest blogger comes from Gary of Biiwii.com, a site that provides top notch analysis and
commentary on stocks, currencies, commodities and bonds. I’m a frequent reader of the blog and
HIGHLY encourage you to check out Gary’s site for more analysis.
===========================================================
Long time readers of the Biiwii.com blog know that I rely on ratio charts to the max. In fact, I find
these ratios between different markets to be absolutely vital to being on the right side of the trade
where macro themes are concerned. A recent example is the Dow/Gold ratio, which allowed me to
navigate the oncoming - and entirely predictable - rally in stocks (both in nominal terms and in ‘real’
terms as measured in gold) that began in the fear filled days of March. Our April Letter from the main
website, Reset/Recalibrate explained the process by which market sentiment needed to be reset.
Here is the monthly ratio chart that was used in the letter:
Of interest now is the Gold/Oil Ratio, which appears to be in the bottoming process amid bullish
divergence by RSI & MACD. This is an absolutely vital ratio to gold stock traders as oil is a major
cost input to mining operations and with the likelihood of the ratio bottoming, gold miners’ bottom
lines stand to benefit as their product (gold) begins to outperform one of their major cost drivers (oil).
Here is a current daily chart showing the status of the ratio. Gold, while having been pummeled in oil
terms recently (along with nearly everything else), may well turn up from here in terms of crude:
I also routinely use the Gold/Silver Ratio to gauge general market confidence or lack thereof, along
with more traditional sentiment indicators like the VIX and Put/Call Ratios. Other ratios which have
appeared on the blog have included the S&P500/Nikkei Ratio, NDX/Dow and even SOX/NDX. All
provide hints as to sentiment and/or macro-fundamentals and hence future market direction.
To summarize, you can trade any market but it is very important to be aware of the major trends and
turning points between different markets and assets classes so that you may be aware of whether or
not you are on the right side of the trade in the bigger picture. As traders and investors, we need
every edge we can get.

Forex Trading with the MACD

After receiving many requests, I’ve contacted the team from DayTradeology to help explain how to
use MACD AND Forex. Please let me know what you think of the Guest Blog spot.
=================================================================
The MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator
that shows the relationship between two moving averages of prices. The MACD is calculated by
subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of
the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for
buy and sell signals when trading the forex market.
First Some History
Developed by Gerald Appel, Moving Average Convergence/Divergence (MACD) is one of the
simplest and most reliable indicators available.
MACD uses moving averages, which are lagging indicators, to include some trend-following
characteristics.
These lagging indicators are turned into a momentum oscillator by subtracting the longer moving
average from the shorter moving average. The resulting plot forms a line that oscillates above and
below zero, without any upper or lower limits.
Benefits of the MACD
One of the primary benefits of MACD is that it incorporates aspects of both momentum and trend in
one indicator. As a trend-following indicator, it will not be wrong for very long.
The use of moving averages ensures that the indicator will eventually follow the movements of the
underlying security. By using exponential moving averages, as opposed to simple moving averages,
some of the lag has been taken out.
MACD Setup
The default settings for the MACD which we will use are:
Slow moving average - 26 days
Fast moving average - 12 days
Signal line - 9 day moving average of the difference between fast and slow.
All moving averages are exponential.
Although there are three moving averages mentioned you will only see two lines. The simplest
method of use is when the two lines cross. If the faster signal line crosses above the MACD line
( The MACD line is calculated by the difference between the 26-day exponential moving average
and the 12-day exponential moving average) then a buy signal is generated and vice versa.
The higher above the zero both lines are the more overbought it becomes and the lower below the
zero line both lines are the more oversold it becomes.
It may also lead to a stronger signal if the signal line crosses down when it is overbought and
crosses up when it is oversold.
The last common use of MACD is that of divergence.
If the MACD has made a new low and starts to head up but price continues dow making new lows
that is one form of divergence (BULLISH Divergence).
Also, if the MACD has made a high and starts to head down making new lows but price continues up
making new highs that is another type of divergence (BEARISH Divergence). This is also referred to
as Negative Divergence and is probably the most reliable of the two and can warn of an impending
peak.
There are many ways to trade the MACD but one of our favorites are too use two different time
frames. All we do is establish a trend in a higher time period than the one we intend to trade. For our
higher time frame we like to use the 30 min chart and then drop down to the 5 min chart when
conditions have been met on the 30 min chart.
On the 30 min forex trading chart below there was a typical buy signal. The chart below (red arrow)
shows the fast 9-day signal EMA (gray line) crossing over the MACD line EMA (green line).

After confirming the signal on the 30 min chart we then dropped to the 5min chart and bought the
rallies wherever the MACD crossed up, confident to stay long (to buy) as long as our higher time
period MACD trend in the 30 min stayed intact. If the 30 min MACD signal line were to cross down
we would have closed all long positions.

Conclusion
The MACD is not particularly good for identifying overbought and oversold levels even though it is
possible to identify levels that historically represent overbought and oversold levels. The MACD does
not have any upper or lower limits to bind its movement and can continue to overextend beyond
historical extremes.
Also the MACD calculates the absolute difference between two moving averages and not the
percentage difference. The MACD is calculated by subtracting one moving average from the other.
As a security increases in price, the difference (both positive and negative) between the two moving
averages is destined to grow. This makes its difficult to compare MACD levels over a long period of
time, especially for stocks that have grown exponentially.
With some charts you can set the MACD as a histogram. The histogram represents the difference
between MACD and its 9-day EMA. The histogram is positive when MACD is above its 9-day EMA
and negative when MACD is below its 9-day EMA.
That having said, the MACD still is and will always be one of the few indicators that all traders love
and use daily and in many ways it is an old familiar friend you know you can rely on.