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MACD is a powerful tool that can sometimes be hard to understand and use effectively. What if there was a way series...and lot's more
you could use the various components of MACD to your advantage, rather than using just the one method, that
can see you whipsawed in and out of trades with monotonous regularity. The more powerful uses of MACD are ...a value of $99, but yours free.
often overlooked by inexperienced traders, but it's these other uses of MACD that can add a very dynamic and
powerful tool to your tool box.
First
Name
Experienced traders will always use MACD in it's dynamic form, and will also use it in conjunction with other tools
such as trend lines, support and resistance, volume and so on. Email

MACD stands for Moving Average Convergence Divergence and was developed by Gerald Appel. MACD uses
moving averages (default being 26 and 12) which are lagging indicators, but these lagging indicators are turned Submit
into a momentum oscillating indicator by subtracting the longer moving average from the the shorter moving
average.

To find out more click here

The result is the blue line in the top chart below. The red line is the the 9 day, exponential moving average of
the blue line. (In the top window, the black line is the 26 day MA and the white line is the 12 day MA) The red
and green graphs are actually what is called the histogram, and is a visual representation of the distance
between the blue and red lines. This can also be used quite effectively.

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Dean Whittingham

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everything that you do for us. I'm
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informative emails, I enjoy reading

them and find them very informative
and enlightening...Ummar"

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The theory being that when the blue line crosses the red line to the up side, it is bullish. When the blue line crosses
the red line to the downside it is bearish. But there is a big problem with this theory on it's own as you can see from
the bottom chart. It is very common to find crossovers happening quite regularly in a sideways market, and the buy
and sell signals will see you whipsawed in and out of the market with losses.

Unfortunately, this negative side of MACD will often scare traders off from using MACD in a way that gets better
results. The other dynamics to MACD are called divergence, and utilizing the zero line in conjunction with support
and resistance.

Divergence is split into two parts, positive divergence and negative divergence, and it is basically a visual
representation of a weakening in price coupled with increasing strength in MACD, or a weakening in MACD
coupled with increasing prices. There are two ways of spotting divergence and that is with the MACD line itself
and/or the histogram.

The other dynamic is to use the zero line, or what it sometimes called the waterline, as a way of confirming a
bullish or bearish move with some form of support and resistance in price, and usually this follows a divergence
signal.

If you'd like to see a free downloadable video explaining how to use these dynamic methods of
MACD then fill in the form below.

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