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  1. #1
    Rookie Member

    Difference between stochastic and MACD !!!

    Hi, I apologize if there's a thread on this already but i couldn't find any in the search box.

    I have been using bolinger, rsi, macd for trading and doing ok, Now i have added another indicator stochastic and i quite like it been trading with it for about a week.

    I don't understand why sometimes stochastic crosses the line in an upward trend and macd crosses in a downward trend. Why is this? It's not often but it happens. For a shorter time period i think stochastic works very good but for a longer period i find that macd is better.

  2. #2
    Veteran Member hchandra's Avatar
    its just the period and formula used, I think people use something like 15,3,3 for stochastic and 26,19,3 something for MACD,
    from the numbers we can take conclusion candles used in calculation really different, MACD usually use more candles / period to calculate and
    in time series analysis, the longer the period usually more valid to determine the trend.
    Lastly, basically both of them are derived from prices

  3. #3
    Legendry Member Michael Hodges's Avatar
    you have to understand that they measure different things. totally different things, which is why they work well together. MACD measures the distance between two moving averages, smoothed by another moving average...usually a 12 and 26 smoothed by a 9. The stochastic measured prices in relation to the high and low of a period, and is based on random walk theory, Brownian motion and chaos theory. the best signals are when these two agree.

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