I’ve been playing with tick charts. Has anyone had success with the MACD on the Dow? I’ve recently switched from Forex because I lost too much money in it.

Here’s my MACD rules. I use the 15 min chart. Even if the MACD is trending up on the 1 hr chart, if it is trending down on the 15 min chart, that’s what you take your cue from. That’s not to say a shift in price direction is not in the works. It just means it’s coming, but not yet. In the meantime, you don’t want to miss what’s happening “in the now,” which is what is reflected in the 15 min chart.

I only use the MACD to see if a divergence is taking place and not for buy or sell signals. It is a lagging indicator and is therefore useless in fast moving markets as a buy or sell trigger like the Forex market.

Again, MACD divergence on the 15 min chart is more significant than what you see on the 1 hr chart in the near-term. For those of you who don’t understand what divergence means, divergence is where you see MACD waves in the opposite direction to price action. That’s why I connect the top of the waves (in a downtrend) and the bottom of the waves (in an uptrend).

Always watch your back by using 20-30 pip stops. Mental stops are okay, but not if you are really serious about using a disciplined approach to managing your money. You will lose three out of ten trades. The three losses should be kept to 20-30 pips. You need to let your winners ride. Your wins will far surpass your small losses, and that’s what stop-losses are all about. Don’t be afraid to take losses.