Forecasting buy and sell trade decisions… 1 answer below »

Assignment 1 –
Use the MACD indicator to analyze how well the MACD trading indicator worked for Dell Inc. Using the MACD indicator generate buy and sell signals using the exponential moving averages and calculate how much profit/loss would occur in 2011 using (1) long only trades and (2) both long/short trades.
Directions: Use the closing data provided by fetchyahooquotes for Dell Inc. (Dell.dta) from January 1, 2000. Calculate the MACD buy/sell indicators over the entire period then subset the data using only observations since January 1, 2012 to graph the results and answer the following questions.
Questions:
(1) How much profit/loss would you have since January 1, 2012 if you traded using long only trades beginning with the first signal after January 1, 2012 assuming you close out your position on the last date?
(2) How much profit/loss would you have over the same period if you traded using both long/short trades? (Note:If the prior signal was a buy and you have a sell signal, you sell the current long position plus sell an additional position to go short. If the prior signal was a sell and you have a buy signal, you buy the current short position plus buy an additional position to go long.)
(3) How much profit/loss would you have over the same period in 2012 if you bought and held the stock?
(4) Why or why didn’t the MACD technical trading method perform well?

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Assignment 1 –

Use the MACD indicator to analyze how well the MACD trading indicator worked for Dell Inc. Using the MACD indicator generate buy and sell signals using the exponential moving averages and calculate how much profit/loss would occur in 2011 using (1) long only trades and (2) both long/short trades.

Directions: Use the closing data provided by fetchyahooquotes for Dell Inc. (Dell.dta) from January 1, 2000. Calculate the MACD buy/sell indicators over the entire period then subset the data using only observations since January 1, 2012 to graph the results and answer the following questions.

Questions:
(1) How much profit/loss would you have since January 1, 2012 if you traded using long only trades beginning with the first signal after January 1, 2012 assuming you close out your position on the last date?
(2) How much profit/loss would you have over the same period if you traded using both long/short trades? (Note: If the prior signal was a buy and you have a sell signal, you sell the current long position plus sell an additional position to go short. If the prior signal was a sell and you have a buy signal, you buy the current short position plus buy an additional position to go long.)
(3) How much profit/loss would you have over the same period in 2012 if you bought and held the stock?
(4) Why or why didn’t the MACD technical trading method perform well?

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