💼MACD – how does it work?
MACD is a technical indicator whose properties are that it measures the ratio of exponential moving averages ( EMA ). The MACD displays the MACD line, the signal line and the histogram, showing the difference between the MACD line and the signal line.
The difference between the two EMAS is shown by the MACD line. As a rule, this line has 12 and 26 periods, while the signal line is usually an exponentially smoothed average of the 9 periods of the MACD line.
The indicator has a zero line, around which the MACD lines fluctuate. Due to this, the MACD gives signals characteristic of the oscillator, which are signals of overbought and oversold market above and below the zero line, respectively.
📐MACD - WHAT DOES IT MEASURE?
As we have already found out, the MACD uses lines and the zero line as control points, and based on them, the indicator measures the momentum or strength of the trend:
-When the MACD line crosses the zero line, it signals an UPTREND.
-When the MACD line crosses BELOW the zero line, it signals a DOWNTREND.
Perhaps the main property of the indicator is the property to signal the moment of entry into a position, which are issued when two MACD lines intersect:
-When the MACD line crosses the signal line ABOVE, it is a buy signal.
-When the MACD line crosses BELOW the signal line, it is a sell signal.
As a rule, the MACD is a free indicator that is installed on all trading platforms, the only thing left for a trader to do is to adjust it to his trading system.
❗️MACD and RESTRICTIONS
Each indicator works better at certain moments of the market, the MACD is no exception. The indicator gives the best signals when there is a trend movement in the market. For example, if the markets are in consolidation, the indicator usually gives the wrong signals. Every trader should understand this and be able to use the indicator correctly, in the right time interval.
The indicator is very flexible and it can confuse a beginner. It is worth remembering the rules for using the indicator, remembering at what point it works and at what point it does not. It is also worth remembering the basic principles of using the indicator:
It is worth following the settings of the EMA parameters
And do not forget that the correct operation of the indicator depends on the time period.
📉MACD INDICATOR: A BRIEF DESCRIPTION
The main advantage of the MACD is that it can produce signals of both the oscillator and the intersection of the moving averages. This double analysis makes it possible to better understand what is happening in the market, to remove noise, to enter into transactions correctly and on time.
MACD is a technical indicator whose properties are that it measures the ratio of exponential moving averages ( EMA ). The MACD displays the MACD line, the signal line and the histogram, showing the difference between the MACD line and the signal line.
The difference between the two EMAS is shown by the MACD line. As a rule, this line has 12 and 26 periods, while the signal line is usually an exponentially smoothed average of the 9 periods of the MACD line.
The indicator has a zero line, around which the MACD lines fluctuate. Due to this, the MACD gives signals characteristic of the oscillator, which are signals of overbought and oversold market above and below the zero line, respectively.
📐MACD - WHAT DOES IT MEASURE?
As we have already found out, the MACD uses lines and the zero line as control points, and based on them, the indicator measures the momentum or strength of the trend:
-When the MACD line crosses the zero line, it signals an UPTREND.
-When the MACD line crosses BELOW the zero line, it signals a DOWNTREND.
Perhaps the main property of the indicator is the property to signal the moment of entry into a position, which are issued when two MACD lines intersect:
-When the MACD line crosses the signal line ABOVE, it is a buy signal.
-When the MACD line crosses BELOW the signal line, it is a sell signal.
As a rule, the MACD is a free indicator that is installed on all trading platforms, the only thing left for a trader to do is to adjust it to his trading system.
❗️MACD and RESTRICTIONS
Each indicator works better at certain moments of the market, the MACD is no exception. The indicator gives the best signals when there is a trend movement in the market. For example, if the markets are in consolidation, the indicator usually gives the wrong signals. Every trader should understand this and be able to use the indicator correctly, in the right time interval.
The indicator is very flexible and it can confuse a beginner. It is worth remembering the rules for using the indicator, remembering at what point it works and at what point it does not. It is also worth remembering the basic principles of using the indicator:
It is worth following the settings of the EMA parameters
And do not forget that the correct operation of the indicator depends on the time period.
📉MACD INDICATOR: A BRIEF DESCRIPTION
The main advantage of the MACD is that it can produce signals of both the oscillator and the intersection of the moving averages. This double analysis makes it possible to better understand what is happening in the market, to remove noise, to enter into transactions correctly and on time.