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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. #31
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    The macd is a good indicator on the forex markets . It could be helpfull to get some signals with the Moving Average in additionnal , to get a more complete vision of the positions to open for the long term on the markets . For example , the 100 MA could be helpfull to detect the trend of the currency pairs . It is recommanded by all traders to use more than one indicator at the time in order to get some new orders on the forex markets , with adequate SL and TP levels .

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  3. #32
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    MACD is a good indicator and it has a good place between the good indicators that are widely used by the traders around the world, it can be used in many ways and so it can be used by following its signals in buying or selling or using of its divergence during trading and make some money and also it can be used an assistant to any strategy.

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  4. #33
    Trader snnaky's Avatar
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    Quote Originally Posted by sameeh View Post
    MACD is a good indicator and it has a good place between the good indicators that are widely used by the traders around the world, it can be used in many ways and so it can be used by following its signals in buying or selling or using of its divergence during trading and make some money and also it can be used an assistant to any strategy.
    [lang=ar]The most people use this indicator without knowing the most suitable time frames. This is a mistake. It is not important to use only a suitable indicator, but it is important to use the appropriate frame also to be the decision more better so I use this indicator with the same default settings .but it must be on hourly time frame[/lang]

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  5. #34
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    MACD is one of the best indicators in the market and the trader can use it for trading an making of money if he trades with it properly and knows when to choose the good trading positions with it, it can be used with different setting or can be used with another indicators and so the trader can choose the best for him for making of good trading.

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  6. #35
    Trader musiliu's Avatar
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    Quote Originally Posted by snnaky View Post
    [lang=ar]The most people use this indicator without knowing the most suitable time frames. This is a mistake. It is not important to use only a suitable indicator, but it is important to use the appropriate frame also to be the decision more better so I use this indicator with the same default settings .but it must be on hourly time frame[/lang]
    macd works well on every timeframe, but as with any other indicators, they are more reliable on higher timeframes than lower timeframes. The timeframes you should use should depend on your trading schedule, and the type of trader you are. if you are a swing trader, then 1h and 4 hr are the most appropriate options and for a day trader, 5 minute and 15 minutes are really good.

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  7. #36
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    MACD is a decent marker and nearly we as a whole know the excellence of this pointer. You have truly clarified well that how we can utilize this for uniqueness and meeting. Mate, default setting is dependably functions admirably in a wide range of indicator's, and I would likewise recommend to utilize default setting of MACD in exchanging. MACD exchanging procedure is looking straightforward and straightforward

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  8. #37
    Trader jamey's Avatar
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    Good thread mate, MACD is a very good index and almost everyone we know beauty of this index. You've really well explained how we can use this for categories and compression. Matt, the default setting always works well with all kinds of indices, and I would recommend using MACD's default settings in trading. MACD trading techniques are easy to understand and looking good, very easy to understand

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  9. #38
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    MACD is a good indicator and the trader that understand it well then he will be able to make good trading that leads to making of good money, the trader needs to follow its signals that is in the direction of the trend and so he will be able to maximize the profit and will be able to enjoy trading more and more, the trader can use it alone or with another indicators.

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  10. #39
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    Macd is is an oscillator indicator and perfect for ranging market conditions. It is not good for trend trading, I recently used macd for trend trading but I lost a lot because macd is showing counter Trend trading signal. So is a advisable to avoid macd in a trending market conditions and only use it for sideways market conditions.

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