Have you ever experienced entering a trade and ended up regretting it after a short while? Well, you may be using the wrong strategy. To help you in dealing with trades and take away all those unnecessary presses, read this article further and get the vital information you need.
MACD or the Moving Average Convergence Divergence indicator is said to be one of the most effective forex strategies. With this help, you will be rest assured of the success of your forex trading venture. Just like any other indicators, entering trades alone can be so risky. But, if this is properly and carefully used together with other effective tactics, this will lead you to become successful in your trading venture.
Taking Moving Average Convergence Divergence Separately
Now, let's take a closer look at MACD and study its elements and details. Mostly, charting packages sets two EMA's or the Exponential Moving Averages in the evasion MACD which is at 12 and 26 days. A colored line is used as a representation which crosses diverse colored 9 EMA sometimes referred to as the trigger line. However, remember that colors differ based on the charting package. If the MACD (12/26 EMA) goes beyond the trigger line (9 EMA), the uphill impetus is specified and vice versa.
A zero or center line which is also commonly called as the water line can also be found in the said indicator. If this indicator is above the water line, an upward trend is being shown and when it is below the line, it indicates a downward trend. In MACD, a histogram is also included; this is made up of small perpendicular lines which look like valleys and mountains. They can be seen either below or above the zero line.
Moreover, this Moving Average Convergence Divergence is a delay indicator chasing over price action. The histogram serves as the MACD indicator so, if you closely watch this, you can see earlier where the MACD is going. The histogram height is a good indicator of momentum.
MACD Used as a Safety Marker
Should you want to be very careful with your forex strategy in order to end up with great odds for success, you must closely focus with the MACD on the first and fourth charts. There are several traders who will just go over the trade if the 1 and 4 hours are going on similar path. This just shows lesser trades yet sure-winning profits.
The 1 hour chart is specifically powerful. So it is advisable not to trade against the 1 hour direction. It's not actually risky to do it if only you are an expert in this kind of thing. However, if you are yet a novice and have less experience in trading, it is best to trade only when the MACD goes up or shortly when it goes down on the hourly chart as other indicators in line will give you a greater success in your Forex Strategy. With this, you will avoid miscalculations and worries about the success or failure of your investment.