TRADERS’ TIPS
For this month’s Traders’ Tips, the focus is Barbara Star’s article in this issue, “Zero In On The MACD.” Here, we present the May 2016 Traders’ Tips code with possible implementations in various software.
The Traders’ Tips section is provided to help the reader implement a selected technique from an article in this issue or another recent issue. The entries here are contributed by software developers or programmers for software that is capable of customization.
In “Zero In On The MACD” in this issue, author Barbara Star describes how she interprets and uses the classic MACD indicator originally created by Gerald Appel almost 40 years ago. Star also describes several methods she uses to help further refine her signals. These include the positions of weighted and exponential moving averages relative to the market as well as activity shown by the aroon indicator, which was originally developed by Tushar Chande. Here, we are providing the TradeStation EasyLanguage code for the lower MACD histogram indicator as well as the upper PaintBar/warning symbols indicator.
Indicator: MACD ColorBars inputs: FastLength( 12 ), SlowLength( 26 ), UpColor( Blue ), DnColor( Red ) ; variables: MACDValue( 0 ), PlotColor( 0 ) ; MACDValue = MACD( Close, FastLength, SlowLength ) ; if MACDValue > 0 then PlotColor = UpColor else PlotColor = DNColor ; Plot1( MACDValue, "MACD HISTO", PlotColor ) ; PaintBar: Warning Symbols using elsystem ; using elsystem.drawing ; using elsystem.drawingobjects ; inputs: MACDFastLength( 12 ), MACDSlowLength( 26 ), MACDUpColor( Blue ), MACDDnColor( Red ), WMALength( 34 ), EMALength( 55 ), WMAEMAAboveColor( Magenta ), WMAEMABelowColor( Blue ), AroonLength( 25 ), AroonUpColor( Green ), AroonDnColor( Red ), LabelSize( 16 ), ShowWMAEMALabels( true ), ShowAroonLabels( true ) ; variables: MACDValue( 0 ), PlotColor( 0 ), double WMAValue( 0 ), double EMAValue( 0 ), double AroonUpValue( 0 ), double AroonDnValue( 0 ) ; method void DrawLabel( string Character, string Myfont, double Price, int MyColor, int FontSize, VerticalStyle VLoc ) variables: DTpoint MyPoint, TextLabel MyLabel ; begin MyPoint = DTPoint.Create( BarDateTime, Price ) ; MyLabel = TextLabel.Create( MyPoint, Character ) ; MyLabel.Color = Color.FromARGB( GetRValue( MyColor ), GetGValue( MyColor ), GetBValue( MyColor ) ) ; MyLabel.Font = Font.Create( Myfont, FontSize ) ; MyLabel.VStyle = VLoc ; MyLabel.HStyle = HorizontalStyle.Center ; MyLabel.Persist = false ; MyLabel.Lock = true ; if DrawingObjects <> NULL then DrawingObjects.Add( MyLabel ) ; end ; MACDValue = MACD( Close, MACDFastLength, MACDSlowLength ) ; WMAValue = WAverage( Close, WMALength ) ; EMAValue = XAverage( Close, EMALength ) ; AroonUpValue = AroonUp( AroonLength ) ; AroonDnValue = AroonDown( AroonLength ) ; if ShowWMAEMALabels then begin if Close < WMAValue and Close >= EMAValue then DrawLabel( "t", "Wingdings", High, WMAEMAAboveColor, LabelSize, VerticalStyle.Bottom ) ; if EMAValue > WMAValue and Close > WMAValue then DrawLabel( "t", "Wingdings", Low, WMAEMABelowColor, LabelSize, VerticalStyle.Top ) ; end ; if ShowAroonLabels then begin if AroonUpValue crosses over AroonDnValue then DrawLabel( "A", "Tradestation", Low, AroonUpColor, 14, VerticalStyle.Top ) ; if AroonUpValue crosses under AroonDnValue then DrawLabel( "Q", "Tradestation", High, AroonDnColor, 14, VerticalStyle.Bottom ) ; end ; if MACDValue > 0 then PlotColor = MACDUpColor else PlotColor = MACDDnColor ; PlotPaintBar( High, Low, Open, Close, "MACD Color Bar", PlotColor ) ;
To download the EasyLanguage code, please visit our TradeStation and EasyLanguage support forum. The code can be found at https://community.tradestation.com/Discussions/Topic.aspx?Topic_ID=142776. The ELD filename is “TASC_MAY2016.ELD.”
For more information about EasyLanguage in general, please see https://www.tradestation.com/EL-FAQ.
A sample chart is shown in Figure 1.
FIGURE 1: TRADESTATION. In this example chart, MACD ColorBars and warning symbol indicators are applied to a daily chart of 3M Co.
This article is for informational purposes. No type of trading or investment recommendation, advice, or strategy is being made, given, or in any manner provided by TradeStation Securities or its affiliates.
Barbara Star’s article in this issue, “Zero In On The MACD,” presents a trading strategy focused on the main line of the MACD. It uses colors and symbols to alert the trader to the market conditions and trend status. Following are the MetaStock formulas to color the MACD and add the colors and symbols to a chart through an expert advisor.
Indicator formula: base:= OscP(12, 26, E, %); If(base>=0, base, 0); If(base<0, base, 0)
After plotting this formula, you will have two lines in your chart. Select the top line and change the color to blue. Set the bottom line color to red. Set both lines to use the histogram style.
Expert Advisor Formulas
Six formulas are used to make the expert. Two are highlights and others are
symbols:
Blue Highlight formula: OscP(12, 26, E, %) >= 0
Red Highlight formula: OscP(12, 26, E, %) < 0
Buy Arrow formula: Cross(OscP(12, 26, E, %), 0)
Sell Arrow formula: Cross(0, OscP(12, 26, E, %))
Top warning diamond formula: C < Mov(C, 34, W) AND H > Mov(C, 55, E)
Bottom warning diamond formula: ma1:= Mov(C, 34, W); ma2:= Mov(C, 55, E); ma2 > ma1 AND C > ma1
For this month’s Traders’ Tip, we’ve provided the studies Star_MA.efs and Star_MACD.efs based on the formulas described in Barbara Star’s article in this issue, “Zero In On The MACD.” In the article, Star presents a method for analyzing the market based on the moving average convergence/divergence (MACD) indicator that was originally developed by Gerald Appel.
The studies contain formula parameters that may be configured through the edit chart window (right-click on the chart and select edit chart). Sample charts demonstrating the studies are shown in Figures 2 & 3.
FIGURE 2: eSIGNAL. Here is an example of the Star_MA study plotted on a daily chart of $INDU.
FIGURE 3: eSIGNAL. Here is an example of the Star_MACD study plotted on a daily chart of $INDU.
To discuss this study or download a complete copy of the formula code, please visit the EFS Library Discussion Board forum under the forums link from the support menu at www.esignal.com or visit our EFS KnowledgeBase at https://www.esignal.com/support/kb/efs/. The eSignal formula scripts (EFS) are also available below.
/*********************************
Provided By:
Interactive Data Corporation (Copyright © 2015)
All rights reserved. This sample eSignal Formula Script (EFS)
is for educational purposes only. Interactive Data Corporation
reserves the right to modify and overwrite this EFS file with
each new release.
Description:
Xxxxxxx by Barbara Star
Formula Parameters: Default:
Fast MACD Length 12
Slow MACD Length 26
Weighted Average Length 34
Exponential Average Length 55
Default Price Bar Color dark grey
Color Price Bars based on MACD true
Color when MACD above 0 blue
Color when MACD below 0 red
Show Arrow at MACD crossing 0 true
Up Arrow Color blue
Down Arrow Color red
Show Warning Diamonds true
Upper Diamond Color magenta
Lower Diamond Color grey
Show Parameters false
Version: 1.00 11/23/2015
Notes:
The related article is copyrighted material. If you are not a subscriber
of Stocks & Commodities, please visit www.traders.com.
**********************************/
var fpArray = new Array();
function preMain(){
setPriceStudy(true)
setStudyTitle("Star Warning");
setCursorLabelName("AvgW",0);
setCursorLabelName("AvgE",1);
setDefaultBarFgColor(Color.green, 0);
setDefaultBarFgColor(Color.red, 1);
setDefaultBarThickness(1,0);
setDefaultBarThickness(1,1);
setColorPriceBars(true);
setDefaultPriceBarColor(Color.RGB(110,110,110));
var x=0;
fpArray[x] = new FunctionParameter("Fast", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Fast MACD Length");
setLowerLimit(1);
setDefault(12);
}
fpArray[x] = new FunctionParameter("Slow", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Slow MACD Length");
setLowerLimit(1);
setDefault(26);
}
fpArray[x] = new FunctionParameter("AvgW", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Weighted Avg Length");
setLowerLimit(1);
setDefault(34);
}
fpArray[x] = new FunctionParameter("AvgE", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Exponential Avg Length");
setLowerLimit(1);
setDefault(55);
}
fpArray[x] = new FunctionParameter("DefaultPBColor", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Default Price Bar Color");
setDefault(Color.RGB(110,110,110));
}
fpArray[x] = new FunctionParameter("ColorPriceBars", FunctionParameter.BOOLEAN);
with(fpArray[x++]){
setName("Color Price Bars based on MACD");
setDefault(true);
}
fpArray[x] = new FunctionParameter("MACDColorUp", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Color when MACD above 0");
setDefault(Color.blue);
}
fpArray[x] = new FunctionParameter("MACDColorDn", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Color when MACD below 0");
setDefault(Color.red);
}
fpArray[x] = new FunctionParameter("showArrow", FunctionParameter.BOOLEAN);
with(fpArray[x++]){
setName("Show Arrow at MACD crossing 0");
setDefault(true);
}
fpArray[x] = new FunctionParameter("ArrowUp", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Up Arrow Color");
setDefault(Color.blue);
}
fpArray[x] = new FunctionParameter("ArrowDn", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Down Arrow Color");
setDefault(Color.red);
}
fpArray[x] = new FunctionParameter("showDiamond", FunctionParameter.BOOLEAN);
with(fpArray[x++]){
setName("Show Warning Diamonds");
setDefault(true);
}
fpArray[x] = new FunctionParameter("DiamondUp", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Upper Diamond Color");
setDefault(Color.magenta);
}
fpArray[x] = new FunctionParameter("DiamondDn", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Lower Diamond Color");
setDefault(Color.grey);
}
fpArray[x] = new FunctionParameter("Params", FunctionParameter.BOOLEAN);
with(fpArray[x++]){
setName("Show Parameters");
setDefault(false);
}
}
var bInit = false;
var xMACD = null;
var xAvgW = null;
var xAvgE = null;
var bVersion = null;
function main(Fast, Slow, AvgW, AvgE, DefaultPBColor, ColorPriceBars, MACDColorUp, MACDColorDn,
showArrow, ArrowUp, ArrowDn, showDiamond, DiamondUp, DiamondDn, Params){
if (bVersion == null) bVersion = verify();
if (bVersion == false) return;
if(bInit == false){
xMACD = macd(Fast, Slow, 1);
xAvgW = wma(AvgW);
xAvgE = ema(AvgE)
setDefaultPriceBarColor(DefaultPBColor);
setShowTitleParameters(eval(Params));
bInit = true;
}
var nMACD = xMACD.getValue(0);
var nMACD_1 = xMACD.getValue(-1);
var nAvgW = xAvgW.getValue(0);
var nAvgE = xAvgE.getValue(0);
var nRawtime = rawtime(0);
if(nMACD_1 == null || nAvgW == null || nAvgE == null) return;
if(ColorPriceBars){
if(nMACD > 0){
setPriceBarColor(MACDColorUp);
}
if(nMACD < 0){
setPriceBarColor(MACDColorDn);
}
}
if(showArrow){
if(nMACD > 0 && nMACD_1 <= 0){
drawShape(Shape.UPARROW, BelowBar2, ArrowUp, "UpArrow"+nRawtime);
} else {
removeShape("UpArrow"+nRawtime);
}
if(nMACD < 0 && nMACD_1 >= 0){
drawShape(Shape.DOWNARROW, AboveBar2, ArrowDn, "DnArrow"+nRawtime);
} else {
removeShape("DnArrow"+nRawtime);
}
}
if(showDiamond){
if(close(0) < nAvgW && high(0) >= nAvgE){
drawShape(Shape.DIAMOND, AboveBar1, DiamondUp, "UpDiamond"+nRawtime);
} else {
removeShape("UpDiamond"+nRawtime);
}
if(nAvgE > nAvgW && close(0) > nAvgW){
drawShape(Shape.DIAMOND, BelowBar1, DiamondDn, "DnDiamond"+nRawtime);
} else {
removeShape("DnDiamond"+nRawtime);
}
}
return [nAvgW, nAvgE];
}
function verify(){
var b = false;
if (getBuildNumber() < 779){
drawTextAbsolute(5, 35, "This study requires version 10.6 or later.",
Color.white, Color.blue, Text.RELATIVETOBOTTOM|Text.RELATIVETOLEFT|Text.BOLD|Text.LEFT,
null, 13, "error");
drawTextAbsolute(5, 20, "Click HERE to upgrade.@URL=https://www.esignal.com/download/default.asp",
Color.white, Color.blue, Text.RELATIVETOBOTTOM|Text.RELATIVETOLEFT|Text.BOLD|Text.LEFT,
null, 13, "upgrade");
return b;
}
else
b = true;
return b;
}
/*********************************
Provided By:
Interactive Data Corporation (Copyright © 2015)
All rights reserved. This sample eSignal Formula Script (EFS)
is for educational purposes only. Interactive Data Corporation
reserves the right to modify and overwrite this EFS file with
each new release.
Description:
Xxxxxxx by Barbara Star
Formula Parameters: Default:
Fast MACD Length 12
Slow MACD Length 26
Default MACD Color blue
Default Price Bar Color dark grey
Color MACD true
Color Price Bars based on MACD true
Color when MACD above 0 blue
Color when MACD below 0 red
Show Parameters false
Version: 1.00 11/23/2015
Notes:
The related article is copyrighted material. If you are not a subscriber
of Stocks & Commodities, please visit www.traders.com.
**********************************/
var fpArray = new Array();
function preMain(){
setStudyTitle("Star MACD");
setCursorLabelName("MACD",0);
setDefaultBarFgColor(Color.RGB(0xFE,0x00,0x6D), 0);
setPlotType(PLOTTYPE_HISTOGRAM,0);
setDefaultBarThickness(2,0);
setColorPriceBars(true);
setDefaultPriceBarColor(Color.RGB(110,110,110));
var x=0;
fpArray[x] = new FunctionParameter("Fast", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Fast MACD Length");
setLowerLimit(1);
setDefault(12);
}
fpArray[x] = new FunctionParameter("Slow", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Slow MACD Length");
setLowerLimit(1);
setDefault(26);
}
fpArray[x] = new FunctionParameter("DefaultMACDColor", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Default MACD Color");
setDefault(Color.blue);
}
fpArray[x] = new FunctionParameter("DefaultPBColor", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Default Price Bar Color");
setDefault(Color.RGB(110,110,110));
}
fpArray[x] = new FunctionParameter("ColorMACD", FunctionParameter.BOOLEAN);
with(fpArray[x++]){
setName("Color MACD");
setDefault(true);
}
fpArray[x] = new FunctionParameter("ColorPriceBars", FunctionParameter.BOOLEAN);
with(fpArray[x++]){
setName("Color Price Bars based on MACD");
setDefault(true);
}
fpArray[x] = new FunctionParameter("MACDColorUp", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Color when MACD above 0");
setDefault(Color.blue);
}
fpArray[x] = new FunctionParameter("MACDColorDn", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Color when MACD below 0");
setDefault(Color.red);
}
fpArray[x] = new FunctionParameter("Params", FunctionParameter.BOOLEAN);
with(fpArray[x++]){
setName("Show Parameters");
setDefault(false);
}
}
var bInit = false;
var xMACD = null;
var bVersion = null;
function main(Fast, Slow, DefaultMACDColor, DefaultPBColor, ColorMACD, ColorPriceBars, MACDColorUp, MACDColorDn, Params){
if (bVersion == null) bVersion = verify();
if (bVersion == false) return;
if(bInit == false){
xMACD = macd(Fast, Slow, 1);
setDefaultPriceBarColor(DefaultPBColor);
setDefaultBarFgColor(DefaultMACDColor);
setShowTitleParameters(eval(Params));
bInit = true;
}
var nMACD = xMACD.getValue(0);
if(nMACD == null) return;
if(nMACD > 0){
if(ColorMACD){
setBarFgColor(MACDColorUp,0);
}
if(ColorPriceBars){
setPriceBarColor(MACDColorUp);
}
}
if(nMACD < 0){
if(ColorMACD){
setBarFgColor(MACDColorDn,0);
}
if(ColorPriceBars){
setPriceBarColor(MACDColorDn);
}
}
return nMACD;
}
function verify(){
var b = false;
if (getBuildNumber() < 779){
drawTextAbsolute(5, 35, "This study requires version 10.6 or later.",
Color.white, Color.blue, Text.RELATIVETOBOTTOM|Text.RELATIVETOLEFT|Text.BOLD|Text.LEFT,
null, 13, "error");
drawTextAbsolute(5, 20, "Click HERE to upgrade.@URL=https://www.esignal.com/download/default.asp",
Color.white, Color.blue, Text.RELATIVETOBOTTOM|Text.RELATIVETOLEFT|Text.BOLD|Text.LEFT,
null, 13, "upgrade");
return b;
}
else
b = true;
return b;
}
We’ll illustrate the application of methods described in Barbara Star’s article in this issue, “Zero In On The MACD,” with two example strategies, long-only and short-only.
The first one enters long when price is above the 55-period EMA and when the price bars are blue—that is, after the crossover with the MACD’s zero line has taken place. In addition, you can drag the slider in the lower-left corner to activate “warnings.” To highlight this trade filter, the bars are painted orange when the EMA is above the 34-period WMA and the price closes above the WMA (see Figure 4).
FIGURE 4: WEALTH-LAB. Riding the bullish trend in gold in the winter of 2016.
The second method attempts to profit on divergence reversals. When price moves higher but the MACD does not reflect that move, creating a lower top, the strategy fades the move as illustrated on Figure 5 and exits after a specified number of bars.
FIGURE 5: WEALTH-LAB. Here’s an example of shorting a price top not confirmed by an MACD bearish divergence in SCG (Scana Corp.) in February 2015.
using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;
using WealthLab.Indicators;
namespace WealthLab.Strategies
{
public class TASCMay2016_Crossovers : WealthScript
{
private StrategyParameter paramUseWarnings;
public TASCMay2016_Crossovers()
{
paramUseWarnings = CreateParameter("Filter Warnings",0,0,1,1);
}
protected override void Execute()
{
var wma = WMA.Series(Close,34);
var ema = EMA.Series(Close,55,EMACalculation.Modern);
var macd = MACD.Series(Close);
bool avoidWarningBars = paramUseWarnings.ValueInt == 1 ? true : false;
macd.Description = "MACD as Histogram";
ChartPane MACDPane = CreatePane(25, true, true);
PlotSeries(MACDPane, macd, Color.Red, LineStyle.Histogram, 2);
for (int bar = GetTradingLoopStartBar(55 * 3); bar < Bars.Count; bar++)
{
bool isBarBlue = false;
bool isAboveMA = Close[bar] > ema[bar];
bool isWarning = (Close[bar] < wma[bar]) && (High[bar] > ema[bar]);
if ( macd[bar] > 0 )
{
SetSeriesBarColor( bar, macd, Color.Blue );
SetBarColor( bar, Color.Blue );
isBarBlue = true;
if( isWarning )
SetBarColor( bar, Color.Orange );
}
else if ( macd[bar] < 0 )
{
SetSeriesBarColor( bar, macd, Color.Red );
SetBarColor( bar, Color.Red );
}
if ( (CrossOver(bar, macd, 0) && !avoidWarningBars) ||
(CrossOver(bar, macd, 0) && avoidWarningBars && !isWarning) )
BuyAtMarket(bar + 1);
if (CrossUnder(bar, macd, 0))
SellAtMarket(bar + 1, Position.AllPositions, "MACD");
}
}
}
}
using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;
using WealthLab.Indicators;
namespace WealthLab.Strategies
{
public class TASCMay2016_Divergences : WealthScript
{
private StrategyParameter peakPctPrice;
private StrategyParameter peakPctIndicator;
private StrategyParameter exitBars;
public TASCMay2016_Divergences()
{
peakPctPrice = CreateParameter("Price Peak%", 4, 2, 10, 1);
peakPctIndicator = CreateParameter("Indctr Peak%", 20, 5, 30, 1);
exitBars = CreateParameter("Exit bars", 20, 1, 30, 1);
}
// Strategy logic
protected override void Execute()
{
int pkPctPrice = peakPctPrice.ValueInt;
int pkPctIndicator = peakPctIndicator.ValueInt;
int barsToHold = exitBars.ValueInt;
int lastDetectedBar = 0;
_barLastChecked = 0;
DataSeries rsi = MACD.Series(Close);
ChartPane rsiPane = CreatePane(40, true, true);
PlotSeries(rsiPane, rsi, Color.Brown, WealthLab.LineStyle.Solid, 2);
for(int bar = 20; bar < Bars.Count; bar++)
{
if (IsLastPositionActive) {
Position p = LastPosition;
if (bar + 1 - p.EntryBar >= barsToHold)
CoverAtMarket(bar + 1, p);
}
else if (PeakDivergence(bar, Close, pkPctPrice, rsi, pkPctIndicator, rsiPane))
if( ShortAtMarket( bar+1 ) != null )
LastPosition.Priority = Close[bar];
}
}
// Returns true if divergence with indicator detected on the specified bar
public bool PeakDivergence(int bar, DataSeries price, double pctRev1, DataSeries ind, double pctRev2, ChartPane indPane)
{
bool divergeDetected = false;
PeakTroughMode mode = PeakTroughMode.Percent;
int pb1 = (int)PeakBar.Value(bar, price, pctRev1, mode);
if (pb1 > _barLastChecked) {
_barLastChecked = pb1;
int pb2 = (int)PeakBar.Value(pb1, price, pctRev1, mode);
if (pb2 > -1) {
int testBar = Math.Min(bar, pb1 + proxBars);
int ibar1 = (int)PeakBar.Value( testBar, ind, pctRev2, mode);
// test peak proximity
if (Math.Abs(pb1 - ibar1) > proxBars) ibar1 = pb1;
int span = Math.Min(pb1 - pb2 - 1, proxBars);
testBar = Math.Min(ibar1 - 1, pb2 + span);
int ibar2 = (int)PeakBar.Value( testBar, ind, pctRev2, mode);
if (ibar2 < 0) ibar2 = 0;
if (Math.Abs(pb2 - ibar2) > proxBars) ibar2 = pb2;
divergeDetected = Math.Sign(price[pb1] - price[pb2]) != Math.Sign(ind[ibar1] - ind[ibar2]);
if (divergeDetected) {
// Highlight bar detected
SetPaneBackgroundColor(PricePane, bar, Color.FromArgb(40, Color.Blue));
DrawLine(PricePane, pb1, price[pb1] * 1.01, pb2, price[pb2] * 1.01, Color.Blue, LineStyle.Solid, 2);
DrawLine(indPane, ibar1, ind[ibar1] * 1.01, ibar2, ind[ibar2] * 1.01, Color.Red, LineStyle.Solid, 2);
if (Math.Sign(price[pb1] - price[pb2]) == 1)
for (int b = pb2; b <= pb1; b++)
SetPaneBackgroundColor(indPane, b, Color.FromArgb(40, Color.Red));
}
}
}
return divergeDetected;
}
private const int proxBars = 6;
private int _barLastChecked = 0;
}
}
The indicators and signals described by Barbara Star in her article in this issue, “Zero In On The MACD,” can be easily implemented in NeuroShell Trader. Simply select new indicator from the insert menu and use the indicator wizard to create the following indicators in the graphing style listed:
MACD Histogram (Graph in Histogram Style) MACD(Close,12,26) MACD Buy/Sell Signals (Graph in Point Style) IfThenElse(CrossAbove(MACD(Close,12,26),0),Mul2(High,1.02),*) IfThenElse(CrossBelow(MACD(Close,12,26),0),Mul2(Low,0.98),*) MACD Price Coloring (Graph in Line Style) IfThenElse(A>B(MACD(Close,12,26),0),Close,*) IfThenElse(A<B(MACD(Close,12,26),0),Close,*) Weighted and Exponential Average Lines (Graph in Line Style) LinWgtAvg(Close,34) ExpAvg(Close,55) Diamond Warning Symbols (Graph in Point Style) IfThenElse(And2(A<B(Close,LinWgtAvg(Close,34)),A>B(High,ExpAvg(Close,55))),Mul2(High,1.01),*) IfThenElse(And2(A>B(ExpAvg(Close,55),LinWgtAvg(Close,34)),A>B(Close,LinWgtAvg(Close,34))),Mul2(Low,0.99),*) Aroon Indicators (Graph in Line Style) Aroon Down(Low,25) Aroon Up(Low,25) Aroon Crossover Signals (Graph in Line Style) IfThenElse(CrossAbove(Aroon Up(Low,25),Aroon Down(Low,25)),Aroon Down(Low,25),*) IfThenElse(CrossBelow(Aroon Up(Low,25),Aroon Down(Low,25)),Aroon Up(Low,25),*)
Note that the aroon-up and aroon-down indicators are found in the Advanced Indicator Set 1 add-on. Users of NeuroShell Trader can go to the STOCKS & COMMODITIES section of the NeuroShell Trader free technical support website to download a copy of this or any previous Traders’ Tips.
A sample chart is shown in Figure 6.
FIGURE 6: NEUROSHELL TRADER. This NeuroShell Trader chart displays the MACD histogram, signals & price colors, the weighted and exponential average lines & signals, and the aroon lines, and crossover signals.
The AIQ code based on Barbara Star’s article in this issue, “Zero In On The MACD,” is provided at www.TradersEdgeSystems.com/traderstips.htm, and is also shown below.
FIGURE 7: AIQ. Here is a sample chart of VIAB with MACDhist, the color bars, and the 34- and 55-bar EMAs.
Figure 7 shows the MACD histogram on a chart of Viacom (VIAB) with the color bars and the 34- and 55-bar exponential moving averages (EMA). Note that I did not code the weighted moving average (WMA) but substituted the EMA for the WMA. I chose to view the chart of VIAB by running the EDS “Zero MACD.eds” on 3/14/2016 and examining the alert messages on the report “List.” VIAB is the only one on that date that showed a cross up on the MACDhist (see Figure 8 for a look at part of this report for 3/14/2016).
FIGURE 8: AIQ. This shows part of the EDS custom report “List” that shows the MACDhist values on 3/14/2016, the color status, and any alerts that were generated for that day.
! ZERO IN ON THE MACD ! Author: Barbara Star, TASC May 2016 ! Coded by: Richard Denning 3/14/16 ! www.TradersEdgeSystems.com ! INPUTS: macd1 is 12. macd2 is 26. macdSig is 1. ! INDICATORS: emaST is expavg([Close],macd1). emaLT is expavg([Close],macd2). MACD is emaST - emaLT. ! MACD line SigMACD is expavg(MACD,macdSig). ! MACD Signal line MACDosc is MACD - SigMACD. ! MACD Oscillator HD if hasdatafor(macd2) = macd2. MACDhist is MACD. ! plot as historigram MACDblue if MACDhist > 0. ! use these rules to color MACDhist MACDred if MACDhist < 0. ! use these rules to color MACDhist MACDcolor is iff(MACDblue and HD,"Blue",iff(MACDred and HD,"Red","White")). !for report list List if 1. !ALERTS: EMA1 is expavg([close],34). EMA2 is expavg([close],55). xupEMA1 if [close] > EMA1 and valrule([close] < EMA1,1). xdnEMA1 if [close] < EMA1 and valrule([close] > EMA1,1). xupEMA2 if [close] > EMA2 and valrule([close] < EMA2,1). xdnEMA2 if [close] < EMA2 and valrule([close] > EMA2,1). xupMACD if MACDhist > 0 and valrule(MACDhist < 0,1). xdnMACD if MACDhist < 0 and valrule(MACDhist > 0,1). UpAlerts is iff(xupEMA1,"xupEMA1",iff(xupEMA2,"xupEMA2",iff(xupMACD,"xupMACD"," "))). DnAlerts is iff(xdnEMA1,"xdnEMA1",iff(xdnEMA2,"xdnEMA2",iff(xdnMACD,"xdnMACD"," "))).
The code and EDS file can be downloaded from www.TradersEdgeSystems.com/traderstips.htm.
The TradersStudio code based on Barbara Star’s article in this issue, “Zero In On The MACD,” can be found at www.TradersEdgeSystems.com/traderstips.htm.
The following code file is provided in the download:
Figure 9 shows the MACD on a chart of Apple Inc. (AAPL) with the color bars that are based on whether the MACD is above zero (blue bars) or below zero (red bars).
FIGURE 9: TRADERSSTUDIO. Here is a sample chart of AAPL showing the zero MACD color bars.
The code is shown here:
' ZERO IN ON THE MACD
' Author: Barbara Star, TASC May 2016
' Coded by: Richard Denning 3/15/2016
' www.TradersEdgeSystems.com
sub ZERO_MACD_IND(mdLen1,mdLen2,mdLen3)
Dim zMACD As BarArray
zMACD = (macd(C,mdLen1,mdLen2,mdLen3))
If zMACD > 0 Then
barcolor(0) = vbBlue
Else If zMACD < 0 Then
barcolor(0) = vbRed
Else
barcolor(0) = vbWhite
EndIf
EndIf
plot1(zMACD)
plot2(0)
End Sub
A variation of the MACD indicator, as discussed in Barbara Star’s article in this issue, “Zero In On The MACD,” is available for download at www.ninjatrader.com/SC/May2016SC.zip.
Once you have it downloaded, from within the NinjaTrader Control Center window, select the menu File → Utilities → Import NinjaScript and select the downloaded file. This file is for NinjaTrader version 7.
You can review the indicator’s source code by selecting the menu Tools → Edit NinjaScript → Indicator from within the NinjaTrader Control Center window and selecting the MACDVariation file.
Note that adding the indicator to a chart will not automatically add the EMA and WMA indicators; these will need to be manually added. Ensure that the periods match the periods specified in the MACDVariation indicator.
NinjaScript uses compiled DLLs that run native, not interpreted, to provide the highest performance possible.
A sample chart implementing the strategy is shown in Figure 10.
FIGURE 10: NINJATRADER. Here, the MACD variation indicator is displayed on a daily chart of FSLR.
Our Traders’ Tip for this month is based on the article “Zero In On The MACD” by Barbara Star in this issue.
In the article, Star seeks to develop the classic MACD indicator by improving the visual aspect such that candles are colored according to the MACD position relative to the zero line—blue above and red below (Figure 11). In addition, the MACD itself is shown as a histogram as opposed to a solid line as traditionally displayed.
FIGURE 11: UPDATA. Here, the MACD zero indicator is applied to the Market Vectors Semi-Conductor ETF (SMH) in weekly resolution.
The Updata code is in the Updata library and may be downloaded by clicking the custom menu and indicator library. Those who cannot access the library due to a firewall may paste the code shown below into the Updata custom editor and save it.
DISPLAYSTYLE 2LINES
INDICATORTYPE TOOL
INDICATORTYPE2 CHART
PLOTSTYLE CANDLE
PLOTSTYLE2 HISTOGRAM
NAME MACD Zero
PARAMETER "MACD Period 1" #PERIOD1=12
PARAMETER "MACD Period 2" #PERIOD2=26
@MACD=0
FOR #CURDATE=#PERIOD1+#PERIOD2 TO #LASTDATE
'INDICATORS
@MACD=MACD(#PERIOD1,#PERIOD2,E)
@PLOTOPEN=OPEN
@PLOTLOW=LOW
@PLOTHIGH=HIGH
@PLOT=CLOSE
'PLOTS
IF @MACD>=0
COLOUR RGB(0,0,200)
COLOUR2 RGB(0,0,200)
ELSE
COLOUR RGB(200,0,0)
COLOUR2 RGB(200,0,0)
ENDIF
@PLOT2=@MACD
NEXT
In “Zero In On The MACD” in this issue, author Barbara Star combines a set of tools that make for a good first-cut look at the behavior of something you might be considering for a trade.
To begin, we have a couple of ways to look at the MACD indicator.
FIGURE 12: EXCEL. Here is the MACD with MACD signal line.
Next, Star suggests adding a couple of moving averages to the price chart that contribute to the generation of cautionary diamonds on the chart. These warn of possible, but not necessarily confirmed, approaching price trend changes (also Figure 13).
FIGURE 13: EXCEL. Here, the background colors per MACD with averages and cautionary points are displayed.
Finally, Star uses the aroon indicator to provide an additional set of trend change hints (Figure 14).
FIGURE 14: EXCEL, aroon alerts
With the charts tab set for your favorite tradable and handy for your reference, it is well worth a couple of close rereadings of this article to fully understand Star’s interpretations of these indicators, both at the trend change points, and also as a trend evolves over time. Enjoy!
The spreadsheet file for this Traders’ Tip can be downloaded here. To successfully download it, follow these steps: