21. How to Trade the MACD Indicator Like a Pro Part 2


www.informedtrades.com The second lesson of two on how to trade the moving average convergence divergence (MACD) for day traders and investors using technical analysis in the stock market, futures market, and forex market. The link that I reference in my video is here: www.informedtrades.com In addition to being able to tell if the stock, futures contract, or currency you are analyzing is trending or not from simply looking at its price action on the chart, you can also use the MACD indicator. Very simply if the MACD line is at or close to the zero line, this indicates that the financial instrument you are analyzing is not exhibiting strong trending characteristics, and thus should not be traded using the MACD. Example of Trending and Non Trending Markets Once it is determined that the financial instrument you are analyzing is exhibiting trending characteristics, there are three ways that you can trade the MACD. 1. Positive and Negative Divergence 2. The MACD/Signal Line Crossover 3. The zero line crossover Trading the MACD Divergence: Divergence occurs when the direction of the MACD is not moving in the same direction of the financial instrument you are analyzing. This can be seen as an indication that the upward or downward momentum in the market is failing. Traders will thus look to trade the reversal of the trend and consider this signal particularly strong when the market is making a new high or low and the MACD is not. Example of Negative Divergence: Trading the …

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31 Responses to “21. How to Trade the MACD Indicator Like a Pro Part 2”

  1. FreeFOREXautoROBOT says on June 20th, 2010 at 22:41 :

    I prefer Forex robot – i got one free and very profitable

  2. vanzobee says on June 20th, 2010 at 23:30 :

    WHY IS PEOPLE HATING!? teach me more please

  3. PonguigPeopinn says on June 20th, 2010 at 23:30 :

    I used this method and now I’m poor.

  4. mosesravoori says on June 20th, 2010 at 23:57 :

    Can u please guide me the best platform giving correct signals for demo and live on MT4

  5. jgray110 says on June 21st, 2010 at 00:32 :

    Wiki, it worked great in the 80s but losses now. correct should be used with other stuff

  6. distrangis says on June 21st, 2010 at 00:44 :

    hey thanks…….it really helped me

  7. ghahandi says on June 21st, 2010 at 01:16 :

    MACD, like a lot of oscillators shouldn’t be used alone. Bottom line. Price is gonna do what price is gonna do. In this video, you’ll notice that the MACD showed divergence after divergence after divergence after it’s bull run. It was great for taking out a long trade, and maybe reentering the swings. But to to try to fade those divergences would have killed your capital. They are lagging indicators based on the past, after all.

  8. aslamaman says on June 21st, 2010 at 01:55 :

    hi dave!
    are these all charts available in FXCM trade demo, which u are teaching about. please direct me from can i find?

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  11. CCbroadcasting says on June 21st, 2010 at 02:38 :

    dave you the best

  12. Kritobart76 says on June 21st, 2010 at 03:23 :

    Thanks Dave for sharing your knowledge . I like the MACD divergence however as a lagging indicator it s not really useful when u have a sharp trend change. ’cause when u get the MACD crossover of the zero line the party is already over as it s too late to entrer the position. R u agreed?

  13. LiptonGuy says on June 21st, 2010 at 03:46 :

    - funny……

  14. holula says on June 21st, 2010 at 04:31 :

    I don’t think so, I think that if you use the 12,26,9 MACD parameters at the 1 or 5 minutes chart,you would get only market noise. I sugest trying with lower parameters and wach it for 1 or 3 days and then get in to the market. But u should use it at 1 hour or daily chart. Saludos…desde México…

  15. braileanul says on June 21st, 2010 at 05:20 :

    i am puzzled about one thing tho.

    at the end of the video the example with great signal with entry buy ,respective exit selling.

    my question specific to exactly this great signal : nobody says a word about multiple time frame. what about that?

  16. cherylish1 says on June 21st, 2010 at 05:38 :

    on a one minute chart – what parameters should the MACD be set at ? or the 5minute chart? what MACD parameters would you use ?

  17. cherylish1 says on June 21st, 2010 at 06:13 :

    maybe the 3 numbers that are set do not match the chart you are watching – such as 1 minute chart, 15 min chart or even daily chart- you have to set MACD to what you are watching

  18. dirtyal1234 says on June 21st, 2010 at 06:59 :

    i have never liked the macd indicator. it seems like it lags to far behind. i am suprised that it is the default on all charts. i am a novice, but just sayin. is it just me?

  19. conceil8 says on June 21st, 2010 at 07:37 :

    .

    Christians of this website, the judgement day have started already, please I urge you to depart from all form of unchristian conduct lest you be found not worthy to enter the kingdom of God. Please do not label my activity spam, I did not do it for that purpose.

    .

  20. xexkxex says on June 21st, 2010 at 07:55 :

    I think your caps lock button is broke.

    /sarcasm

  21. jhonylaboriel says on June 21st, 2010 at 08:34 :

    HI DAVE: I PERSONALLY LIKE DIVERGENCE AS AN INDICATOR OF TREND CHANGE BUT I WOULD LIKE TO KNOW MORE ABOUT HOW TO ENTRY, WHERE AND ALSO HAVE SOME PARAMETERS TO DO IT SO. hOW CAN I HAVE SOME HELP ON THAT? THANKS A LOT AND CONGRATULATIONS FOR SHARING YOUR KNOWLEDGE WITH US.
    J.C.

  22. maxpowers053183 says on June 21st, 2010 at 08:48 :

    nothing is 100% reliable.

  23. nhlgoalie2003 says on June 21st, 2010 at 09:30 :

    on the chart you showed in this video, it looked like a cup and handle signal, shouldnt that mean the stock was about to continue its initial uptrend? because it started to fall instead

  24. InformedTrades says on June 21st, 2010 at 10:07 :

    Thanks for the comment and for watching I am glad you like the video. Many people like the Divergence of the MACD histogram to give them an indication that the trend is changing, however keep in mind that nothing is 100%. Best Regards, Dave

  25. mybestcollection says on June 21st, 2010 at 10:26 :

    This is one of the best free video i have ever seen on macd. Great work keep it up.
    I got a question can we use divergence of macd histogram to know that trend is changing.

  26. InformedTrades says on June 21st, 2010 at 10:33 :

    my pleasure glad you liked it. I like to use multi timeframe analysis to identify support and resistance in the market and using this in conjunction with indicators such as the MACD. Best Regards, Dave

  27. IchigoMe says on June 21st, 2010 at 10:56 :

    Firstly thanks for these videos, I’ve just started learning about technical analysis and am going to trade forex when I feel comfortable with my progress.

    You mention the MACD giving bad signals, what other types of indicator are good to use with MACD for confirmation?

    Thanks.

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  30. Dewey Brancheau says on June 24th, 2010 at 02:56 :

    Great blog post.Really looking forward to read more.

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