Weekend again and time for my usual post. This week I want to share a new variation of the popular MACD Indicator.
Last week we had a look at the adaptive MACD. The adaptive MACD was built on the difference of two adaptive moving averages. This time I tested with a variation of MAVD with the difference between a non adaptive moving average and adaptive moving average. One was a conventional EMA of period 14. The other was an adaptive moving average whose period is adapted to the dominant cycle. Just to differentiate we shall christen the new indicator as KMACD. During long trends the dominant cycle gets longer and the adaptive moving average period also gets longer making it much smoother however at the expense of lag. Because of this the KMACD catches the long term trends fully without the whipsaws which the conventional MACD is prone too. However there is always a price we have pay which is the lag. However with proper exit strategies one should be able to catch the big trends fully without the usual peak draw downs.