How to Trade the MACD with Success Part 1.avi

www.globalmarkettrader.com

In this video we take you through 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. This line is then plotted below the price chart and fluctuates above and below a center line which is placed at zero. Then 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.

So when the MACD line is above zero this indicates that the 12 period exponential moving average is trading above the 26 period exponential moving averages. When the MACD line is below zero this indicates that the 12 period exponential moving average is below the 26 period exponential moving average. Typically traders will be waiting for crosses both above and below the zero line to identify possible trading opportunities and as a sign of both rising bullish momentum on a cross above the zero line. It also represents that the gap between the 12 and 26 period exponential moving average is widening.

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 9 period exponential moving average line is used as a indicator 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.

The histogram as the final piece to the MACD puzzle. Many charting packages will automatically plot the histogram as part of the MACD indicator. The histogram represents 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 and we have a stronger trend. Conversely, when the MACD histogram is below zero this is an indication that negative momentum is increasing and we have a strengthening bearish trend.

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.

So we can say that the higher or lower the histogram goes above or below zero the greater the momentum of the trend.

In our next lesson we are going to explore different ways in which traders use the MACD to identify trading opportunities.

Have a super day!

All the best

Global Market Trader

http://www.youtube.com/watch?v=DVeKBf65acw

Category:

Howto & Style

Tags:

• gmtfutures
• forex trading
• technical analysis
• macd
• trade the stock market
• risk
• reward
• fibonacci
• option
• indicator
• investment
• money

[simcolx]

OK but volume inaudible and signal line invisible.

[spamhater9]

YAWN

[BLACKDAYTRADER]

zzzzzzzzzzzzzzzz

[1Stefv]

hi, great video alot of useful information and the questions i ask are always answered promptly

thanks for everything

sv