Indicator MACD
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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. #2
    Trader lawners1791's Avatar
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    the strategy above absolutely far of the distance as with my personal use with the running of indy on moderating movesment on focusing the histogram drawing with the windows.
    do you have still the different strategy as working of the casual ones with the macd occupation on trading analytics?

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  3. #3
    Trader Hukam's Avatar
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    Good thread mate, MACD is a very good indicator and almost we all know the beauty of this indicator. You have really explained well that how we can use this for divergence and convergence. Mate, default setting is always works well in all types of indicator's, and I would also suggest to use default setting of MACD in trading. MACD trading strategy is looking simple and very easy to understand, good work

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  4. #4
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    Really surprised that why you not get comments in this thread because its a very good indicator called MACD, and one of the best indicator in mt4 terminal. I have added a thumbs up in your thread, because this is a good quality of thread, and there is a good explanation too about it. I would give you one advice, please be active in your thread to get more comment's I can see that you are absent in this thread since many day's.

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  5. #5
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    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.

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  6. #6
    Registered user mohamed reda's Avatar
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    that indicator is so helpful to know divergence so i like it so much and there is many trading system that is totally depend on this indicator only . also MACD cross over indicator is a good way to predict the trends on the biggest time frame so we need this type of indicators while trading to make a good profits form the market .

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  7. #7
    Trader Hukam's Avatar
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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.
    Mate short term trading is good for macd, I know some of my friends who love to follow short term and macd combination, that's depend upon your skill actually because so many trader's are using macd with differ purpose, divergence convergence, scalping, trending these all can applied in MACD indicator. MACD is a very simple indicator and you are right default settings do work better in the market.

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  8. #8
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    Really surprised that why you not get comments in this thread because its a very good indicator called MACD, and one of the best indicator in mt4 terminal. I have added a thumbs up in your thread, because this is a good quality of thread, and there is a good explanation too about it. I would give you one advice, please be active in your thread to get more comment's I can see that you are absent in this thread since many day's.

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  9. #9
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    MACD indicators are one of the best for making money for the long term. They are known as the divergence indicators and with them you can make good amount of money if you follow them the right way. No indicators are perfect and they are lacking that is why it is wise to use it with care.

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  10. #10
    Trader layigold's Avatar
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    This thread could have been more meaningful if you had attached a chart to drive home your point and show to people how you use MACD to determine the convergence and divergence. I am a favorite user of MACD in the past because MACD is known to be an indicator of a price but the way I used my own is completely different from what is explained here and since I do not expect all traders to trade exactly the same way , nobody is to be condemned and what is important is to have good results for what you do

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