The Operating Procedure of MACD - Potential Forex Trades
MACD is a very common tool among the forex traders. The term MACD stands for Moving Average Convergence Divergence. As the name suggests, it has something to do with moving averages. When you place a MACD chart, the tool finds out the difference between 26 day EMA and 12 day EMA. Along with the difference, a nine day EMA is also placed on the MACD chart. The tool provides buy or sell hints for the traders. When MACD is below the nine day EMA, it is providing a selling signal. On the other hand, when MACD is on top of the nine day EMA, it is giving a buying signal.
Nevertheless, you should not use only MACD for your trading. Use it along with other indicators for getting the best possible result. When using MACD, be cautious during volatile periods. The tool tends to act slowly in this situation. Most of the traders do not follow this rule and as a result, lose their money. Interestingly, they blame the indicator for their loss instead of them not following the rules accordingly.
As MACD acts on average prices of the pairs, it does not include the sentimental of fundamental issues. You already know that both of these are major players in price action and should not underestimate at all. MACD only provides a projection of the future price action, while the actual action depends on the sentiment of traders and the fundamental strength of the currencies. Mix up all of these, each of your trades will be profitable.
MACD is a very common tool among the forex traders. The term MACD stands for Moving Average Convergence Divergence. As the name suggests, it has something to do with moving averages. When you place a MACD chart, the tool finds out the difference between 26 day EMA and 12 day EMA. Along with the difference, a nine day EMA is also placed on the MACD chart. The tool provides buy or sell hints for the traders. When MACD is below the nine day EMA, it is providing a selling signal. On the other hand, when MACD is on top of the nine day EMA, it is giving a buying signal.
Nevertheless, you should not use only MACD for your trading. Use it along with other indicators for getting the best possible result. When using MACD, be cautious during volatile periods. The tool tends to act slowly in this situation. Most of the traders do not follow this rule and as a result, lose their money. Interestingly, they blame the indicator for their loss instead of them not following the rules accordingly.
As MACD acts on average prices of the pairs, it does not include the sentimental of fundamental issues. You already know that both of these are major players in price action and should not underestimate at all. MACD only provides a projection of the future price action, while the actual action depends on the sentiment of traders and the fundamental strength of the currencies. Mix up all of these, each of your trades will be profitable.