ZERO LAG MACD GROUP REVERSALS

The RSKsys Tick Indicator tracks the trend of the MACD in a unique way.  Imagine placing the MACD on 6 different time intervals and being able to tell whether the MACD trend was in agreement.  Further imagine you could identify which of these 6 intervals agree and which do not.  Add to this the ability to tell precisely when the trend is changing, not by calculating the trend at the close of the bar, but calculating it intrabar.  In a general sense, this is what the Tick Indicator can do, but there is much more.  

The Indicator can plot the results of these calculations on any array of Tick bar or Share bar intervals.  At present, we use an array ranging from 25 tick bars all the way up to 440,000 share bars.  Compared with time, that is similar to running a MACD on a 5 second bar up to an 80 minute bar.  The MACD trend on any single interval would appear rather useless, but its utility is discovered by tracking the trend shift from two or more intervals at the same time and updating that calculation long before the bar closes.  The Indicator never plots the MACD.  Instead it determines how many of the 6 intervals have a MACD trend that is in agreement and then assigns a color code to denote the total.  The color code is then plotted on any Tick Bar Interval the Trader chooses.  Our preference is to plot it on a 25 tick bar, but that is purely a matter of choice. 

Before illustrating what this looks like, further explanation is required.  Our first step is to select 6 different intervals and group them together.  For example  a certain group might include these 6 intervals. 500, 700, 1000, 2000, 4000, 6000.

The Indicator then assigns a color code denoting the total number of intervals that have confluent trends.

Positive MACD Trend                    Negative MACD Trend

1 = green                                             1 = yellow

2 = white                                              2 = magenta

3 = cyan                                               3 = darkmagenta

4 = darkcyan                                        4 = red

5 = darkgreen                                      5 = darkred

6 = gold                                               6 = gray

So if the bar color was gold,  we would know that all 6 intervals had simultaneous positive MACD trends.  If the color was gray, all 6 were negative etc.   That having been said the real utility to this approach is evident when any 1 of the 6 reverses its trend.  This is how a Group Reversal is defined and it can identify precisely when high probability trades are set up particularly during intraday market retracements.

In the example below,  the overall trend of the MACD was positive yet the ES was falling.  A significant retracement of 14 points took place before the rally.  The Group Reversal system showed us exactly where the shift took place and where an exceptional long trade could be taken riding the market back up.

Chart 1 paints the ES tick bars gold, indicating all 6 MACD's of the underlying tick bars were positive.  No color changes ever took place even though the market moved down over a 4 hour period.  Chart 2 on the other hand shows a clearly defined Group Reversal precisely at the low of the retracement which is followed by a robust rally of 16 points.  This is a perfect example of the kind of precision delivered by the Group Reversal system on nearly every day.

Chart 1  Chart 2

This chart displays a retracement where the reversal is clearly defined by painting the low of the move magenta on the exact 25 tick bar where the rally resume. 

A well defined long group reversal occurs right at the bottom of the move. Characteristic of group reversals, the signal happens right after the turn usually 1/4 to 1/2 a point from the low. 

Automated Trading is included as part of the system.

The Accuracy of Group Reversals Illustrated.

Perfect Entries. Group Reversals and Gaps.

WHAT IS THE IMPACT OF USING TICK BARS VERSUS SHARE BARS