The Goal

To find more money in less time by trading our edge EVERY time it appears.

The Simple

Understanding the basics of an indicator.

The Not Easy

Understanding how to apply the indicator to master our trading edge.

The Discussion – add a picture for reference

Hello my trading friends!

The MACD is one of probably 1000s of indicators that we can use to make money trading. It is also one of the 1000s of indicators that we can use that lose money trading.

We should start by asking, what is an indicator? An indicator is not a magic wand that can make money appear or disappear. An indicator is nothing more than a measuring device.

When we want to measure how long something is, we use a measuring device called a tape measure. If we want to know how fast we are moving, we use a measuring device called a speedometer. When we want to measure different aspects of price, we use a device called an indicator.

It helps to keep in mind that an indicator indicates which direction price might move. An indicator is not a guaranteer. There are no guarantees in trading. There are only probabilities and we will discuss how to use probabilities to our advantage later.

There are two main categories of indicators. Indicators are either trending based, also known as lagging indictors, or they are oscillating indicators, also known as leading indicators.

There are a few different versions of the MACD indicator. The version we use contains both lagging and leading indicators.

The MACD indicator has 4 main parts. One, the MACD line. Two, the Trigger line. Three, the Center line. Four, the histogram bars.

The MACD line is a faster moving average.

The Trigger line is a slower moving average.

The Center Line is reference for the direction of the trend.

The Histogram Bars are a representation of power in price movement as calculated by the difference of the MACD Line and the Tigger Line.

There is plenty of informational details of what makes up the different elements of the MACD indicator. It can send us down a bad rabbit hole. The information of how price data makes up the parts of the MACD indicator will not make us a better trader. Do we really need to know how a ruler or a speedometer is made or how their parts are made in order to use them properly? Does not knowing such details prevent us from using these rulers and speedometers successfully? For now, let’s stay focused and learn how to use our measuring device for every day use.

We use the different parts of the one MACD indicator to for our trading edges.

The MACD was invented by Gerald Appel and we are thankful for his sharing. We, all together, stand on his shoulders and those of others to get a better view of the price movement of the world markets. Thank you to all!

The Reminder

The MACD indicator is just a measuring device for price, like a speedometer measures speed.

Next we will consider the different elements on our charts and the reason(s) we use them.

Have a wonderful day!