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When should I use a daily MACD chart vs a weekly MACD chart

SwingMan
SwingMan ✭
in Using Technical Analysis
When should I use a daily MACD chart vs a weekly MACD chart? I noticed that crossover signals may occur at different times for a weekly vs a daily chart. I'm therefore, unsure which signals I should use when looking for trend changes.

Best Answer

  • markd
    markd mod
    edited August 2014 Answer ✓
    Not a MACD user, but following Elder's advice, as I understand it, you would take bullish daily MACD signals when weekly MACD Line is above the Signal line, and avoid them if weekly MACD Line is below it's Signal line. Note this works best with CLEARLY trending stocks. With more volatile stocks, daily MACD will turn first, and by the time weekly MACD gives a signal, the move is actually over.

    If you want to use only one time frame, daily will give you more signals, but the trades will be of shorter duration. Weekly signals are fewer, but when they are good, they catch long moves. But you have to be willing to hold on through larger drawdowns than in the daily timeframe.

    I haven't done the research to see which time frame has a better percentage of profitable signals. You should probably do that to see if there is a difference.

    But I think your choice is really a question of trading style. If you are relaxed, laid back, willing to wait for a really sizeable payday and can sit through the drawdowns, weekly is good. If you need to watch the action like a hawk, hate drawdowns and like to get paid frequently (but in smaller amounts), the daily might suit you better.

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