Best answer:

Answer by Suzane P
I make my strategy using these rules which i have set it out for my self.

MACD rules on the 15 min chart. Even if MACD is, say, trending up on the 1 hr chart, if it is trending down on the 15 min chart, thats what you take your cue from. Thats not to say a shift in price direction is not in the works. It just means its coming, but not yet. In the meantime, you dont want to miss whats happening in the now, which is what is reflected in the 15 min chart.

If MACD is trending down on the 15 min chart, and price is wanting to go north, price will sooner than later head south as it perhaps bounces off a pivot point, or gets turned around at a juncture caught by one of the other three tools you should be using (reading bars, MACD divergence, or trendline analysis). Same thing if MACD is trending up, and price is trying to head south.

Only use MACD for divergence, not for buy or sell signals. It is a lagging indicator, and as such is useless as a trigger. It is too slow for that in the forex world.

Again, MACD divergence on the 15 min chart is more significant than what you see on the 1 hr chart in the near-term. For those of you who dont understand what divergence means, keep looking at my own personal forex trading examples on this page on a daily basis for examples of divergence. Basically, what it means is where you see MACD waves waving in the opposite direction to price action. Thats why I connect the top of the waves (in a downtrend) and the bottom of the waves (in an uptrend) to illustrate that the waves are waving higher in an uptrend and lower in a downtrend in the opposite direction to where price is going.

Always protect your money by using 20-30 pip stops. Mental stops are okay, but not if you are dead serious about using a disciplined approach to managing your money. You will lose three out of ten trades. The three losses should be kept to 20-30 pips. Your wins will by far surpass your small losses, and thats what stop-losses are all about. Dont be afraid to lose. Even professional batters strike out six out of 10 times. Lions are only successful 20% of the time in their chase for the kill. Professional golfers lose 95% of the time. Professional poker players lose 50% of the time. So, your chances are better at trading the forex, using my system of course, than in any other venue. Even businesses have bad inventory. And, life in general is not always 100% for sure.

Hope this helped you too for better understanding of MACD lines. Even i dont hold a large account i started my live trading with just $ 25 with www.finexo.com and right now i am holding $ 100 capital account.

Regards

What do you think? Answer below!

I have posted my understanding at

http://the-forex-trading.blogspot.com

Please let me know if you feel its not right.

Best answer:

Answer by dredude52
I see several things wrong with your blog explanation of MACD.

First, you gave the textbook description of how MACD is computed and used, as a fast MA crossing over a slow MA.

Then you say signals are generated by divergence. Not true. The signals are generated from the crossover, as you first stated, with or without divergence. Divergence is just another aspect of momentum indicators. RSI and other momentum indicators also show divergence, but you will go broke trading just divergence. It happens all the time if you just look, and divergence is little better than 50% correct.

The problem with Momentum Indicators is in a trending market, like right now in the stock market. These indicators can stay Overbought, or in this case, Oversold for days and weeks, signaling a reversal, while the market just keeps going down. The divergence will not help you here, and instead, gives a false signal. This is worse than a “wrong” signal.

Didn’t Gerald Appel develop this indicator? If you want to know how to apply an indicator, read the origins of it first by its creator, then test your “theories” thoroughly before using them, or worse, telling others to use them. Publishing ignorance just gives the whole business a bad name.

Appel said the “signal” comes after the crossover when passing through the 50% zone, I think, as a confirmation.

I gave up on this one a long time ago as a short-term indicator.

Add your own answer in the comments!

Best answer:

Answer by KIRKUK
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_average_conve

here’s some info…

Know better? Leave your own answer in the comments!

Best answer:

Answer by MR.QA
first, you have to understand there is nothing easy and reliable. and if there is, only a small group of people know. if everybody knows the market will adjust so nobody can profit from that trick anymore.

as for your main question, many chartist use 6 day and 12 day MACD as part of their indicators. they may buy when 6 day crosses 12 day on the low and sell on the high.

Know better? Leave your own answer in the comments!