Baseline for Active Investing

Today's author is Jackie Ann Patterson, the editor of BackTesting Report. Previously Jackie Ann showed us how to pick up on a potential trend change as well as how to recognize a mature trend using the MACD indicator. Today she has returned to the Trader's Blog to share a method for testing your trading strategy.

One of the ways that traders use to determine the success of a potential strategy is to use a baseline. A baseline is a benchmark or a standard for comparison. For example, some investors will use the gain/loss of the S&P 500 as a baseline of market performance. That may be useful for investing long-term in large-caps, but less applicable to active investing and shorter-term trading. This article shows you a different method of forming baselines and the win rate results for two types of stock market participants. Continue reading "Baseline for Active Investing"

The Many Moving Parts of MACD

Our guest blog post today is from Jackie Ann Patterson of BackTesting Report.  Jackie’s trading experience extends back to 1994 when Silicon Valley stock options piqued her interest.  In recent years, she’s focused her computer skills on the markets, back testing several indicators on 7,147 stocks over 14 years of price history.  Today’s Trader’s Blog post gives an overview of the MACD indicator.  You can find out more by watching the free video at The Truth About MACD.


The Moving Average Convergence Divergence (MACD) started as a simple concept: measure the difference between two exponential moving averages (EMAs) to get early notice when they might cross.  New applications evolved over the years.  Now the MACD Lines and Histogram form a complex technical indicator that is used in a myriad of ways.  This guest blog post describes the MACD signals in the order of their appearance on the chart, showing you which are the earliest signals to pick up a potential trend change and which indicate a mature trend.

Continue reading "The Many Moving Parts of MACD"