How to Trade Using MACD indicator

The MACD indicator is generally one of the first used by beginner trader. But Moving Average Convergence Divergence doesn't work all the time after knowing that not every trading signal would have worked out well. In this blog, we'll going to learn at bow Moving average convergence divergence is built, MACD divergence trading, fx5 MACD indicator, what is MACD histogram, how to trading MACD divergence and etc.

We will then move on to find at systems that Forex traders can find to trade with MACD histogram in our next post, simple trading system using MACD momentum indicator.

What build up Moving Average Convergence Divergence ?
Moving average convergence divergence is very simple trading indicator, this indicator calculates 2 EMA indicator. The default settings for MACD indicator are calculating Exponential Moving Average of 12, and 26 periods and the signal line of 9 periods moving average indicator.

In bearish markets, the fast MA will trade bearish faster than the slow MA indicator. As the fast MA indicator diverges from the slow MA indicator. And in bullish markets, the 12 Exponential moving average will trade bullish faster than the 26 period Exponential moving average. Moving Average Convergence Divergence trade higher to express this moving difference between 12 MA and 26 MA indicator. The following chart will show this situation, with the 12 period exponential moving average and 26 period exponential moving average traded on the graph along with Moving Average Convergece Divergence using 12 and 26 exponential moving average.

MACD forex indicator helps traders to determine the market trend change, as the blue boxes in the image above began before the bearish trend was finished.

The 0 line is a main section of the MACD, as it tells us when there is no difference between the Exponential moving averages. Moving average convergence divergence will cross the 0 line as the fast MA indicator crosses the slow MA indicator.

Moving average convergence divergence can be helpful for determining trend reversal at the beginning. When we wait zero line crossover, we're trading a MA indicator crossover. The signal is only a MA indicator made on the MACD indicator line, and this value is usually set at 9 periods moving average.

Usually forex traders will find for trading chances if MACD indicator intercepts the signal line. And if MACD indicator line intercept above and over the signal line, it is called long signal and if MACD indicator intercept under the signal line, it called at as a short signal.

The MACD histogram
The MACD histogram is the relationship between the Moving Average Convergence Divergence and signal lines, Forex traders can use the MACD histogram , which is only a bar around the zero line.

in the following chart - when MACD indicator intercepts the signal line, the histogram will cross the zero line. If MACD crosses above and over the signal line, the histogram will move up from the zero line and if MACD indicator intercepts below the signal line the MACD histogram will move below the zero line.

The MACD default settings are 12, 26 and 9. These settings can make too many trading signals. Forex traders searching to take trading signals from MACD indicator.