Momentum Indicator

Comments

• markd mod

  July 14 edited July 14

  They measure two different things, so they wouldn't necessarily move in sync. I've never used BOP so grain of salt.
  
  MACD tracks the difference between moving averages of the close. The idea is when the shorter MA crosses the longer MA, the shorter term players have become strong enough to undo the work of the longer term players (in other words, the counter trend closes have become wider than the trend direction closes), so the trend has, or is about to change.
  
  BOP tracks how often the close is above or below the open. The idea is when the bulls are in charge, they should be able to close above the open most of the time, and when the bears are in charge they should close the bar below the open.
  
  I'm not sure the principle behind BOP is sound. It looks like BOP takes into account not just whether price closes above or below the open, but by how much. I'm not sure that matters. It matter more that it closes above or below the previous close. Also, in general, the important thing for a trend is that the highs are higher in an up trend and the lows are lower in a down trend. It's not that close versus open is not important, its just that I think its less important. Maybe it works, I just haven't tried it.
  
  You would have to do the research to know.

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• lmkwin ✭✭

  July 15

  There really is no such thing as "THE" best indicator. All indicators apply some math, based on your settings, to the same price and/or volume data. I tend to like indicators that I can see on my chartstyles, so I don't use BOP. Looking at BOP it seems like a RSI or StochasticRSI type of indicator. I do use RSI and/or StochRSI on my chartstyles, as well as using in some screening/ alerts.
  
  Both of the indicators you mention will provide setups for entry. All you need to do is determine is what "your" setup settings are. If the two indicators are trending in opposite directions, you would need to study that and figure out if that situation would negate your setup or not really matter in your system. After your study, you may discard one or the other as a "setup" indicator. It's all part of the fun of developing YOUR system to fit your temperment.
  
  I try not to err on letting the perfect be the enemy of the good. If you can get "good" setups to help direct your attention to analyze further, you would be well ahead of most as you would have a basis to look at possible actions for entry (exits).

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• JJJJ ✭

  July 15

  Thanks for the feed back!

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