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Thread: Indicator MACD

  1. #1
    Trader Azis Muslim's Avatar
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    Indicator MACD

    Hello guys

    First thing first, I would like to thank to all kind Moderators who allow and give me an opportunity to make a review about an indicator. And in this thread, I want to share an easy-to-understand things about MACD indicator. Well, lets get started.

    Description of MACD.

    MACD is the abbreviation of Moving Average Convergence Divergence. MACD indicator was created by Gerrald Appel. MACD is similar to Moving Average indicator in many things and has same formula in calculating the market’s movement. But MACD has bit more advantages, they are Convergence and Divergence pattern. This will make MACD more accurate than a simple Moving Average.

    Features and principles of MACD.

    MACD is divided into 3 parts, they are trigger line, center line, and MACD line. Here I only explain the 2 parts to analyze market movement and see the average movement in the charts, and also to see deviations. Once we see deviations, that’s the moment for us to enter the market. When it happened, market will move reversed in matter of time.

    And people start questioning this, what is deviation in MACD? Does it really useful or what? Well, let me explain it. Deviation in MACD is divided into 2 parts, they are Convergence and Divergence.

    1. Convergence
    Convergence is a moment when the chart moved lower but the indicator showed higher. When convergence happened, we’ll see that the chart move reverse and go up. So in this case, we enter the market by going long (buy).

    Rules:
    Simply open buy position once the center line is higher than the MACD line after convergence happen. See the screenshot below:


    Take profit: Immediately close the positions once the indicator start to change the pattern from convergence to divergence. Otherwise, if you wants more profit, simply set a trailing stop or set the stop loss level in profit which is above the buy positions.

    2. Divergence
    Divergence is a moment when the chart moved higher but the indicator showed lower. When divergence happened, we’ll see that the chart move reverse and go down. Different from another pattern, this time we enter the market by placing sell.

    Rules:
    The entry point is when the center line is lower than the MACD line after divergence happen. See the screenshot below:


    Take profit: Just like the previous rules, immediately close the positions once the indicator start to change the pattern from divergence to convergence. Same suggestions, if you wants more profit, simply set a trailing stop or set the stop loss level in profit which is below the sell positions.

    Settings of MACD.

    We should have known that every indicator has many settings which make it more useful to analyze market. In this thread, I will explain the settings of MACD. Please take a look at the screenshots below.


    I just leave all the settings in default without any changes. So, I keep the Fast EMA* at 12, Slow EMA at 26, MACD SMA** at 9, Apply to Close remains the same, and leave the rest blank. (EMA* means Exponential Moving Average and SMA** means Simple Moving Average).

    And we can also see the rest of the tab in MACD setting, there are Parameters (which was described above), Colors, Levels, and Visualization. In Colors tab, we can choose which colors we want to use in our MACD. There are only 2 colors so choose wisely. In Levels tab, we can also change the line’s color and which type of line we want to use in our MACD. And the last tab is Visualizations. It’s used to apply the indicator in which time frame we want to use. I personally suggest to leave it in default and choose click the All time frames.


    My personal opinion and recommendations of MACD.

    MACD is a perfect indicator for those who wants to trade in long term or just simply following the market trends. It helps traders to find the perfect moment to enter the market by viewing and analyzing both convergence and divergence patterns. Once we see one of them (convergence and divergence) surely we will get a lot of profits. But, let me give you some suggestions and recommendations according to this indicator.

    1. MACD is a perfect indicator for long term trader or swing trader which follows trend to trade. Not suggested to those who trade as scalpers.
    2. MACD requires higher time frame such as hourly. Using lower time frames will decrease its accuracy to determine both convergence and divergence.
    3. MACD requires more time to show convergence or divergence. It takes a bit of patience.
    4. Don't fall to false patterns. Read, analyze, and understand this indicator first before apply it in live markets.
    5. Make sure you see one of those 2 patterns before entering the market.
    6. Trade with your own risk. If you lose when you use this indicator, don't blame it. Try to learn and understand it more.

    Conclusions.

    MACD is just an indicator and has same functions like the others, to help traders make money and analyze market. It's just a tool full of settings and adjustments. So, if we make mistakes from it, we can't blame it. It means we need to learn about it more. Understanding an indicator takes some time to focus and discipline. It's not good to learn from one thing to others at the same time because it will give us nothing but only a confusion. I personally choose this indicator as my review in this contest because it's the only indicator that easy to understand for me.

    Finally, we come to the end of this thread. Please, leave all your advice, critics, suggestions, or anything here. I will appreciate for every words you write in here. First to last, thank you so much for reading my review of MACD indicator.

    Good day and happy trading guys

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  2. #21
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    I really like MACD indicator for trading because its best to find the market trend reversal and trading finding. You strategy to find the divergence is really good. Its help us more then use of it because I used it already but you tell us a new and simple way of use this indicator for making successful trades. I only feel difficult to make its setting that is not understand by me.

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  3. #22
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    Quote Originally Posted by fsr333 View Post
    MACD indicator is so much helpful for trading. For long term trading, MAXD is helpful. If we use MACD in high time frame trading then we can get a good result. The default settings of MACD are good for trading. It gives us confirmation.
    MACD indicator is best for technical analysis. My mate explain very good information about the MACD indicator.I am using default parameter and manual parameter.Also, I make a template by two types of MACD indicator. My manual parameter is 10,20,7. I am following divergence and convergence by my manual MACD .MACD accuracy is very good and maximum trade is success.

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  4. #23
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    MACD indicator is one of the best indicators used for trading and it is one of my favorite indicators and so i like trading with it with any strategy, it is a powerful indicator and when used with any strategy it will make it better and more strong, it is suitable for any strategy and with any time frame, and give good results in all of them.

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  5. #24
    Trader kagho's Avatar
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    yes the marcd indicator is a trend showing indicator so it is a lagging indicator thus is not advisable for scalping but it is very effective when i used to use it it my 4 hour time frame as the trend was very clear but it is better if you look for the trend in a bigger time frame than you are trading

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  6. #25
    Trader snnaky's Avatar
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    [lang=ar]In fact I do not like the indicators and i used it because it has too many defects
    are non-minute change with price Why use indicators. Is not developed, nor for me many lost because so do not like it, but i love the PROGRESSION as well as the Elliott Wave Tool[/lang]

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  7. #26
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    [lang=ar]MACD is a very powerful indicator to use in the market it works in any chart you want the stocks or the currencies anything , the point is you should use something with it to filter the signals provided of it such as moving averages or bolinger bands , it works better if you have idea about the fundamentals of the market[/lang]

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  8. #27
    Trader YoyO_o's Avatar
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    my first trading strategy was also the MACD based,and the macd technical indicator is a powerful tool to work in the market. This metatrader platform tool has a high degree of success in its predictions. For this reason, I began to use it more often. At present, the basis of my decisions lie in this indicator. but it need a best setting period and timeframes to make it works properly.

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  9. #28
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    ohh confusing statements it is totally far from mmy own usage of indication.i do not believe all the trader use the same way to trade.every trader use different way to trade and make good earning infacr i know mdcr is very powerful indicator it use to show the chart and currency exchange stock market.may be it take time to learn about 3 months

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  10. #29
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    MACD is considered one of the best indicators in the meta trader and widely used by many traders, and it improves trading and make it better and more profitable, this indicator can give good signals and it is not lagging and more stable than the other indicators, it can be used with different setting and this depends on the trader himself.

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  11. #30
    Trader ara's Avatar
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    As in other threads in this forum that explain about divergence, this is my favorite technique in trading, sometimes I use stoch oscillator for convergence /divergence analysis, but I prefer to use MACD for this technique. I haven't used this strategy anymore so I forgot about the convergence formation, I only know about divergence and I assume that convergence is as bullish divergence, thanks for this useful thread has given me explanation about the difference of convergence and divergence so i remember back.

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