http://www.informedtrades.com/
A lesson on how to trade the Moving Average Convergence Divergence (MACD) in the stock, futures, and forex markets.

The indicator, which was developed by Gerald Appel, is constructed by taking a 12 period exponential moving average of a financial instrument and subtracting its 26 period exponential moving average. The resulting line is then plotted below the price chart and fluctuates above and below a center line which is placed at value zero. A 9 period EMA of the MACD line is normally plotted along with the MACD line and used as a signal of potential trading opportunities in the stock, futures and forex markets.

When the MACD line is above zero this tells the trader that the 12 period exponential moving average is trading above the 26 period exponential moving averages. When the MACD line is below zero this tells the trader that the 12 period exponential moving average is below the 26 period exponential moving average. Traders will watch the MACD line as when it is above zero and rising this is a sign that the positive gap between the 12 and 26 EMA’s is widening, a sign of increasing bullish momentum in the financial instrument they are analyzing. Conversely when the MACD line is below zero and falling this represents a widening in the negative gap between the 12 and 26 day EMA’s, a sign of increasing bearish momentum in the financial instrument they are analyzing.

The purpose of the 9 period exponential moving average line is to further confirm bullish changes in momentum when the MACD crosses above this line and bearish changes in momentum when the MACD crosses below this line.

Example of the Signal Line

Lastly many traders and charting packages will plot a histogram along with the MACD which is representative of the distance between the MACD and its signal line. When the MACD histogram is above zero (the MACD line is above the signal line) this is an indication that positive momentum is increasing. Conversely when the MACD histogram is below zero this is an indication that negative momentum is increasing.

When the MACD histogram is above zero (the MACD line is above the signal line) this is an indication that positive momentum is increasing. Conversely when the MACD histogram is below zero this is an indication that negative momentum is increasing. The higher or lower the histogram goes above or below zero the greater the momentum of the trend is thought to be.

That completes this lesson. You should now have a good understanding of the different components that make up the MACD indicator. In our next lesson we are going to go over some of the different ways that traders use the MACD in their trading so we hope to see you in that lesson.

As always if you have any questions or comments please leave them in the comments section below, and have a great day!

http://www.forexstrategysecrets.com/jumpstart.html

In this video I show 2 trades I made based on the Jump Start strategy which uses Moving Averages and the OsMa.

This webinar has been posted by Vikas Sharma to discuss the signals that one gets from MACD by using technical analysis. For more such interesting webinars by Vikas Sharma, please visit http://stockscorner.blogspot.com

This video shows how to automate stock selection with ChartNexus XPertTrader

This is a tutorial on how to trade foreign currency using the MACD indicator.

EUR/USD pair for the 29th of October, 2007

The correct way to identify a Divergence and correctly draw divergence trendlines.

http://www.myfuturesblog.com

MACD (Moving Average Convergence Divergence). What can you do with it? The MACD is my 1st choice to qualify a profitable forex or futures price pattern.

MACD and MACD Histogram are very useful technical analysis tools. TerraSeeds presents this educational video to illustrate using MACD to spot major trend reversal. This setup is included in TerraSeeds course. More information, www.terraseeds.com

This is an easy to use Forex trading system that anyone can learn to use quickly.