How to Use MACD in Forex Trading (1)

How to Use MACD in Forex Trading (1)  How to Use MACD in Forex Trading (1), Hello friends, I’m sharing more info with you guys

MACD or moving average convergence is a reliable (reliable) technical indicator. Often times we don’t believe in various technical indicators and tend to rely on analysis of candlestick or rail line movements, but when we find a trading signal, we usually look at the direction of the MACD indicator before actually entering.

Two MACD views are frequently encountered as on the trading table here. A is the standard version of the popular Metatrader, consisting of MACD signals in the form of charts and graphs, to B is the traditional version, consisting of MACD charts, signal charts and Moving Average Oscillator (OSMA) in the form of signals, namely MACDOGRAM values. The two are no different and provide the same information.

Many professional traders who are better players of the stock, forex or commodity markets rely on MACD, but of course we don’t want to overestimate this indicator. MACD is not a ‘holy grail’ indicator which means it shows signals to buy or sell, but we can say that MACD is reliable compared to many other technical indicators.

Why MACD can work well ?

This question is of course about the money you will earn. Before answering, it will help you to recall one of the main reasons why many stock and commodity traders fail to make a profit. You have heard or read many times, and we will repeat it here again. Lack of patience is one of the main reasons why many stock traders fail.

Many traders are impatiently waiting for a trade agreement, which is really good, or maybe high. After waiting a few minutes, hours or even days, and not getting any signal share, many traders lose their temper and force themselves to take positions without that clear trade-off. Chancy, could lose profits.

But, when the letter falls ordering war, you will see that in his heart there is a hypocrisy looking at you like the eyes of a man fainting from hatred and fear of death. From that, Straighten your face and They are not patient enough to hold the position of touching the target that was really planned. , so they limit the profits to be earned.

The MACD indicator can solve the problem because the response is a bit slow so as to delay the aces to enter or exit too early. Therefore, MACD is always recommended to use especially by traders and stocks. Another clue that is almost the same is Heikin Ashi.

In many cases, when other indicators even the formation of price action candlesticks show trading signals, MACD signals us to wait, and makes us avoid losses due to the direction of the trend. Also when we want to go in the direction of the trend, but MACD says we are too late because the strength of the trend is already on the decline and will bounce soon. Cases like this we will cover in the next section.

Parameters of MACD indikator indicator

Gerald Appel, a trader and analyst who created this indicator defines MACD as the difference in the exponential moving average of the 12 period (ema-12) and ema-26. The result in the form of a graph is called the MACD main line.

On the traditional MACD display, besides the MACD chart there is a graphic signal (signal line signal) the moving average chart is a MACD with a period of 9. As a trader you probably don’t need to know the calculation of MACD parameters, but if you want to program or modify an EA (expert advisor) or robot, you need to know the calculation of these parameters:

Main line of MACD = ema (close, 12) – ema (close, 26)
Signal = SMA(MACD, 9)
Histogram of the oscillator moving Average (OSMA) = MACD line-signal

On the Metatrader platform the main MACD indicators are displayed in the form of histograms and signal lines in the form of charts, OSMA is created separately, in other trading platforms MACD lines and signal forms are displayed in chart form along with OSMA.

Appearance of MACD histogram in more detail (expanded version)

Similar to the display on the Metatrader platform, only the histogram bars are made colorful to distinguish the sentiment is bullish or bearish. In practice the use of the Extended version does not display the signal line (SMA signal is set = 0), but can be displayed when it is necessary to set the SMA signal = 9.

The picture above shows that when the trend is strong, the distance between the 12 ema and the 26 ema is wide (the 12 ema – the big 26 ema) or the MACD value is large. The longer the distance, the longer the MACD-histogram line. The blue histogram indicates the sentiment of the bull being strong or dominant, while the red color indicates dominance. The yellow line indicates when there is a crossing between the 12 ema and the 26 ema, or MACD = 0.

In trading rules with the intersection of the two moving average lines, a buy signal occurs when the ema-12 line crosses the ema-26 from the bottom up, or MACD is a big zero, and sell occurs when the ema-12 line crosses the ema-26 from above, or MACD is a small zero.

But with a color histogram, you can anticipate a buy signal when the bullish sentiment is strong (area A) before the lines of the two emas cross each other and MACD is above zero (area B). Similarly, anticipate a sell signal when Harish’s feeling is very strong (Area C) before MACD goes below zero (area D).

If you are an aggressive trader, you can buy entries when MACD is in area A and not have to wait for MACD is above zero (area B), or entries to sell when MACD is still in Area C. But of course it must be confirmed by candle formation or other.

Show the trend of the MACD histogram indicator reflecting the trend of price movements. When moving up the trend will be formed-a better high on the price movement and on the histogram line, also when moving on the trend, will be formed are lows (low lows).

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