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1994issue C111-8

Constructing entry and exit on a relative-strength MACD

A relative-strength ratio, one security close divided by a benchmark close, replaces raw price as the MACD input. Specified pairings then use polarity, a trigger-line cross, and in one case a one-point trailing stop as bar-by-bar entry and exit rules.

  • A relative-strength ratio is formed by dividing a security close by a benchmark close and is used as the series on which MACD is calculated.
  • One specified ratio MACD uses 12- and 26-period averages, with a 9-period average of the MACD as the trigger line.
  • Three pairings buy and sell from polarity against zero and the signal average, from the sign of a ratio MACD histogram, or from a next-open trigger-line rule.
  • The histogram pairing adds a one-point trailing stop as a separate exit, and weekly compression applies the same MACD and scan rules to weekly bars.
Entries in this reading3 entries
Trailing stop87 readingsCurrent trackMACD115 readingsRule-based entry174 readings

How the relative-strength ratio is formed

A relative-strength ratio is formed by dividing a security close by a benchmark close. That constructed series is then used as the input on which MACD is calculated, in place of raw price.

How the ratio MACD and trigger line are specified

One specified MACD on that ratio uses 12- and 26-period averages. A 9-period average of the MACD is the trigger line. The trigger line is the signal average of the ratio MACD, used to define a cross and to confirm polarity.

A database filter can keep only cases in which the ratio MACD crosses from below its trigger line to above it.

How entry and exit are paired

One pairing buys on the close when the ratio MACD is above both zero and its signal average, and sells on the close when the ratio MACD is below both zero and its signal average.

Another pairing buys when a histogram of ratio MACD minus its signal is above zero and sells when that histogram is below zero. The histogram pairing also specifies a one-point trailing stop as an additional exit. That trailing stop follows price by a fixed distance and can force an exit independently of the MACD rules.

A third pairing buys at the next open when the ratio MACD is above its trigger line and above zero, and exits a long at the next open when the ratio MACD is below the trigger line.

Each pairing is a rule-based entry. The stated buy, sell, or exit condition is applied the same way on every bar.

Weekly compression and scaling

Daily relative-strength charts can be compressed to weekly bars before the same MACD and scan rules are applied. Scaling the ratio by 10 is stated as a viewing convenience that does not change the MACD.

GM relative-strength MACD versus its trigger, 1993

Longs on this pairing only stand when the relative-strength MACD is above both its trigger and the zero line. That window is open through the June–July advance, shuts on the August cross-down, and reopens only after the October trough once the oscillator recrosses the trigger and then zero. Point values were read from the printed Behold! MACDr chart of General Motors versus the NYSE index.
Longs on this pairing only stand when the relative-strength MACD is above both its trigger and the zero line. That window is open through the June–July advance, shuts on the August cross-down, and reopens only after the October trough once the oscillator recrosses the trigger and then zero. Point values were read from the printed Behold! MACDr chart of General Motors versus the NYSE index.General Motors / NYSE · Daily · 1993-04-01T00:00:00.000Z to 1993-12-31T00:00:00.000Z

Readings are approximate from the raster; the source did not tabulate the series. Behold! built MACDr as the 22-period EMA of (GM close / NYSE close)×10 minus the 44-period EMA, with a 9-period EMA trigger. The long rule required MACDr above both the trigger and zero; the exit was a trigger cross down.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
14 of 80 in the MACD track
19941-3 pp.Next on MACDConstructing a relative-strength MACD crossover spreadsheetThe input series is a relative-strength ratio: one market's daily close divided by a comparison index close.
All readings on this track · 80 readings
  1. 1988Rebuild MACD-Mo and MACD-H before treating them as signals
  2. 1989Four-span MACD lookbacks as perishable parameters
  3. 1989Weekly then daily MACD confirmation on individual stocks
  4. 1991Regime-gated MACD and stochastic rules inside a checklist
  5. 1991Constructing MACD signal lines and divergence tests
  6. 1991MACD parameter order and cycle phase lag
  7. 1992Lengthened bond MACD as an equity regime filter
  8. 1992Long-horizon MACD construction from paired exponential averages
  9. 1993Constructing a signed ten-point trend filter
  10. 1994Constructing lag-reduced double exponential averages for MACD
  11. 1994Seeding DEMA2 filters to build a MACD signal
  12. 1994Constructing MACD from lag-reduced exponential averages
  13. 1994TEMA1 from nested exponential averages, then a two-horizon MACD
  14. 1994Constructing entry and exit on a relative-strength MACD
  15. 1994Constructing a relative-strength MACD crossover spreadsheet
  16. 1995Consensus presignal filters for Relative Strength Index, MACD and the Stochastic oscillator
  17. 1997Confirm the MACD turn with price, then exit on the histogram
  18. 1997Reconstructing a stochastic oscillator, MACD, and a triple-smoothed oscillator
  19. 1997Moving-average windows before crossovers and MACD
  20. 1999Second-stage MACD on relative-strength inputs
  21. 1999Constructing MACD from exponential-average spreads for crossover and divergence
  22. 1999Coding candlesticks into numeric indicators
  23. 2001Second-low confirmation with a percentage oscillator and money-flow filter
  24. 2001Constructing MACD from exponential average spreads and a signal line
  25. 2002Separate bounded and trend-following oscillator rules
  26. 2002Sort the regime before assigning MACD and stochastic jobs
  27. 2002Building classic divergence filters from RSI and MACD
  28. 2002Weekly highs and lows as trend gates
  29. 2002Constructing channel-normalized Fisher reversal signals
  30. 2002Affine-price and the Fisher transform as a constructed companion to MACD
  31. 2003Regularized EMA construction with a MACD line and a thrust oscillator
  32. 2003Curvature-penalized exponential averages versus MACD
  33. 2003MACD, moving averages, and a trend filter as one timing system
  34. 2003Fractional MACD and linear-regression reversal construction
  35. 2004Weekly MACD-histogram timing of bear-market rallies
  36. 2004Candlestick triggers filtered by MACD divergence
  37. 2004Staging energy-complex tops with trendline, breakout, and MACD
  38. 2005Selling climax holds versus fails
  39. 2006Treat a sideways Wave as permission before a breakout
  40. 2007MACD with a Stochastic oscillator for spotting trend reversals
  41. 2007Rebuilding an S&P 500 fifth-wave count after a broken target
  42. 2007Constructing MACD, RSI, and stochastic confirmation for futures
  43. 2007MACD histogram divergence needs a confirming close
  44. 2007Write the plan as a stack: ratio, boundary, then oscillators
  45. 2008MACD divergence and Stochastic oscillator confirmation on lumber futures
  46. 2008Assign confirmation, timing, and a stop before a currency pair is tested
  47. 2008Confirm the ten-bagger launch path before the MACD exit
  48. 2008Reading the offloaded evidence file
  49. 2008A Leader companion for MACD direction warnings
  50. 2008Relative strength exits with MACD averages and RSI
  51. 2008Assign one job per indicator in a three-screens rule set
  52. 2008Sequencing RSI, MACD, and average crossovers
  53. 2010Constructing the Schaff Trend Cycle from MACD and a dominant-cycle window
  54. 2010Schaff Trend Cycle as a MACD and Stochastic oscillator combination
  55. 2010Combining Relative Strength Index, the stochastic oscillator, and MACD as slope filters
  56. 2010Short-term wave and ratio clues without direction calls
  57. 2010A precise pullback entry and an unplanned profit-protection exit
  58. 2010Filtering MACD false signals with trendline breaks
  59. 2011Vendor feeds as an input variable in a MACD evaluation
  60. 2012Out-of-the-money versus in-the-money option sensitivity to implied volatility
  61. 2012MACD window tuning as hold-time control
  62. 2012Combining a moving-average crossover with MACD and support-resistance
  63. 2012Testing a published MACD entry with a histogram and signal-line agreement filter
  64. 2012Treat sample systems as a lab before live rules
  65. 2013Constructing moving averages and MACD from one price series
  66. 2013The next-bar price that forces a MACD signal-line cross
  67. 2013Constructing next-bar MACD reversal prices
  68. 2013Constructing inverted MACD reversal prices
  69. 2014Shared-filter combinations of the stochastic oscillator, MACD, and RSI
  70. 2014Square-root lookbacks for combined MACD and RSI
  71. 2015Audit open interest and trend before trusting oscillator crossovers
  72. 2016MACD without a signal line, confirmed by moving-average trend filters
  73. 2016Use RSI, MACD, and a moving average as a market-health consensus
  74. 2016MACD line versus histogram is a display problem first
  75. 2017Weekly and daily MACD on a single daily chart
  76. 2017Weekly and daily MACD as a stacked momentum filter
  77. 2017Nested weekly and daily MACD from paired EMA spreads
  78. 2018Weekly and daily PPO scale versus MACD, with bounded RSI and stochastic readings
  79. 2018Constructing a weekly and daily percentage price oscillator
  80. 2020Constructing Wyckoff tape reading with MACD, moving-average, and RSI filters
By fieldEntry and exit rules206 readingsBy year199483 readings
All 115 readings tagged MACD
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