I’m using the MACD to spot divergences. I would like to fine tune the fast, slow, and period signals. If you use the MACD, which settings work the best for you?

Most traders use Fast 12, Slow 26, and Sig 9.

Here’s a better way. Adjust the MACD values yourself until you find the fewest false signals (head fake where it breaks about 0 only to fall back down again). For example, let’s use Download TradingSolutions
to do this.

First load in the 1 year’s worth of data for IBKR.

Choose all the MACD indicators.

Choose whether you want to play the long side, short side, or both and how much of the stock you want to buy.

With an MACD with the values of 12, 26, and 9, and $500 initial trading capital, I would have made about $12 between 7/2/08 and 4/17/09 in IBKR. That’s crap.

So rather than use an MACD with 12, 26, 9, I’m going to find a better indicator to work with for IBKR. I repeat the steps above but this time I select all the indicators. Over 600 tests are done, back testing each indicator over the year. Here are the results.

So the Stochastic RSI (10) had 9 trades between 7/2/08 and 4/17/09 for a total gain of 7.72%. When overlay the StochRSI over the chart, I can visually see the accuracy of this indicator.

The red down arrows are the sell signals, and the green up arrows are the buy signals. As you can see, a buy signal was given last Friday.

This is how I would go about approaching indicators rather than just having a default one like the MACD 12,26,9 that you use on every stock. One size does not fit all and what you are doing is forcing the trade rather than letting the stock tell you which indicator is the best to use.