Best MACD trading strategies
The moving average convergence divergence (MACD) indicator can distinguish possibilities across financial markets. Discovering how to execute the tool is critical to a trader’s progress.
What is MACD?
Moving average convergence divergence (MACD) is among the most generally employed technical analysis indicators. It is a movement-following momentum pointer, meaning it views an asset’s momentum to determine whether the movement is up or down, and as such can be applied to give trading signals and distinguish trading possibilities.
How does MACD work?
The MACD pointer runs using three components: two moving averages and a histogram.
The two lines between the indicators may seem like simple moving averages (SMAs), but they are stratified exponential moving averages (EMAs). The slower line is the MACD, while the faster one is the signal.
If the two come together, they are said to be uniting and if they drift apart, they are diverging. The contrast between the two lines is drawn on the histogram. If the MACD were to be trading over the zero line, it would verify an uptrend, underneath, and the indicator would be applied to validate a downtrend.
If the market value was determined to be moving upward – touching higher highs and higher lows, also developing essential levels of protection – traders might access long points. While traders might opt to enter a short state if the asset was in a downtrend, defined by the lower highs and deeper lows, or breaks in assistance levels.
Three common MACD trading strategies
There are a variety of MACD strategies that can be utilized to gain possibilities in markets. Three of the most common strategies involve:
2. Histogram reversals
3. Zero crosses
Read MACD trading strategy Binomo to learn more about MACD Indicators and how to apply them in you trading ventures.