The MACD has a reputation to be a trend indicator, yet it has an equal reputation to be lagging due to its slow responsive signal line. The improved signal line gives the STC its relevance as an early warning sign to detect currency trends. How the STC Works The STC detects up and down trends long before the MACD. It does this by using the same exponential moving averages EMAsbut adds a cycle component to factor currency cycle trends. Since currency cycle trends move based on a certain amount of days, this is factored into the equation of the STC Indicator to give more accuracy and reliability than the MACD.
Since the MACD is nothing more than a series of EMAs with a signal line, the STC has improved on the MACD. MACD has a and period EMA with a nine-period signal line. STC Indicator improved on this by incorporating a and period EMA with a cycle component used as the period signal line. Indicators we can factor cycle trends based on X amount of days, we can then know how far and how long a trend lasts in terms of potential pips to cycle. In terms of indicators both old and new, the STC Indicator is quite original in its conception.
Never before has an indicator been developed using a cycle component. Most use some trading of moving averageparticularly EMAs, as a base because it's easier to calculate and it focuses on recent prices rather than a simple moving average 's long data set of closing prices. Learn more about stochastics in Stochastics: An Accurate Buy And Sell Indicator. STC Development The STC Indicator was developed primarily for fast markets, particularly currency marketsyet it can be employed in any market.
The trend in the modern day is to develop more accurate, reliable and early warning signal detectors to follow prices more accurately using the old models. The invention of the computer made it able to capture speed, accuracy and reliability of prices more uniformly, because the computer eliminated the need to calculate long equations using pen and paper.
So, any new modern indicator will always have a higher reliability factor when a signal is generated. However, as reliable as the STC Indicator may be, never will an indicator be perfect. The reliability factor may be higher but slight problems exist because of the STC's ability to stay in overbought and oversold markets for extended periods.
For this reason, the STC Indicator should be used for its intended purpose: Eventually another signal will generate. An Example The technical code for the STC works like this. The MACD generates its signal when the MACD line crosses with the signal line. The STC Indicator generates its buy signal when the signal line turns up from 25 to indicate a long or turns down indicators 75 to indicate a short. Notice how many more signals the STC generated compared to MACD.
It served as an early warning of trend change on the far left with the long red candle. A sell signal was generated at While the MACD lines hovered aroundthe STC line generated a buy signal at about The next sell signal was generated at about These moves occurred ahead of the buy and sell signals generated by Trading. Indicator Issues Notice how many times the STC line resulted in a straight line to signal an overbought or oversold market.
One certain aspect is that oversold markets will eventually become overbought and overbought markets will become oversold, especially when it comes to the currency cycle aspects of this indicator.
Yet that is not a signal generator. Overbought or oversold markets represented by a straight line can in many instances still represent points on the upside, as it did at the overbought mark at This is the small problem with the STC Indicator. The recommendation is to wait for the signal before jumping in. One can increase the cycle count signal line from 10 and adjust upwards to fit the exact market.
This would represent smaller market turns and a more accurate reading. Caution is advised not to increase the cycle count higher than 40, since that is the maximum currency count. One can also adjust downward to generate many market turns, but they may not be accurate signals. For longer time framed charts such as the weekly, it is recommended to adjust the EMAs to 12 and 26 or 7 and 13, and allow the same amount of cycle counts at 20 as forex signal line.
For shorter time frames, such indicators the minute chart, increase the EMAs to andand allow the same cycle count. A personal recommendation is to allow the indicator to work cycle intended with the recommended indicators, especially when it comes to cycle counts. Better to adjust the EMAs rather than the cycle count trigger line if one has to adjust at all.
Conclusion The inventor of the Forex Indicator allowed the full knowledge of formulas and codes to be released inso the trading public is now becoming aware of its use as an early warning trend signal.
I have personally used and profited from its use on many occasions, and I have personally used the recommended settings. The interesting aspect is that indicators indicator is forward-looking, and is considered a leading indicator.
This means false signals are very rare if ever generated. Plus, signals are generated much faster than the old indicators, such as MACD. For another recommended indicator that works as intended, this is a good one. For additional reading, check out MACD Histogram Helps Determine Trend Changes and Spotting Trend Reversals With MACD. Dictionary Term Of The Day. A legal agreement created by the courts between two parties who cycle not have a previous Latest Videos PeerStreet Offers Cycle Way to Bet on Housing New to Buying Bitcoin?
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Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. A Faster And More Accurate Indicator By Brian Twomey Share. Traders can use "the usual suspects" standard indicators for trend trading when it comes to choosing indicators for investing in commodities. Pay attention to how the exhaustion principle helps technical indicators signal trend reversals when abrupt value changes coincide with high trading volume.
These four stocks recently created a bullish MACD crossover, signaling the potential end of the pullback and the start of the next up-trending wave. Learn how this momentum indicator is used to determine price action on a stock. The MACD is trading popular moving average based indicator, and it is signaling the downtrend will continue in these stocks.
One of the most popular trading indicators is the MACD, and right now it's flashing a bullish signal in these four stocks. Two indicators are usually better than one. Find out how this pairing can enhance your trading. The stochastic oscillator and the moving average convergence divergence MACD are two indicators that work well together.
Find out why the moving average convergence divergence MACD oscillator is considered one of the simplest, most versatile Learn the best technical indicators to use as part of a trading strategy in conjunction with the moving average convergence In technical analysis, it is common to see a series of numbers following a given technical indicator, usually in brackets. Take a look inside one of the most popular and widely trusted technical indicators, the moving average convergence divergence, Understand the exponential moving average, or EMA, and the moving average convergence divergence, or MACD, and their respective A legal agreement created by the courts between two parties who did not have a previous obligation to each other.
A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. A statistical technique used to forex and quantify the level of financial cycle within a firm or investment portfolio over Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage Trading measure of the fair value of accounts that can change over time, such as assets and liabilities.
Mark to market aims A simple, or arithmetic, moving average that is calculated by adding the closing price of the security for a number of time No thanks, I prefer not forex money.