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Explained explained macd strategy macd trading macd forex macd tutorial macd indicator strategy macd indicator settings indicator tutorial macd settings macd indicator settings macd stock trading macd stock macd signal macd setup macd analysis macd basics macd crossover macd crossover strategy macd for beginners. Macd. Formula. Macd trading system macd two lines welcome to looking at the markets with david moadel.
I have received requests to discuss the macd and so let s go ahead. And do that alright here. We go. What is the macd well.
I m using apple as an example today apple stock. And this is a daily chart each candlestick represents one day of price action and my chart came from stock charts. Dot com. Just want to give them credit alright.
So. The macd is a quick way of saying moving average convergence divergence macd. It s a lot easier to say macd. So we ll just go ahead and call.
It that alright so. What is all that stuff mean. It is a momentum indicator that means that it tells the general direction. Okay.
So are we looking at a stock that in the short to medium term does it has tended to trend upward downward sideways. So that s what it does it tells the general direction in the short to medium term. Now you have several parts to the macd indicator. You have the black line.
And that is right here. You can see the black line. And that is called the macd line that s the that s the black line. Then you have the red line.
And that is called the signal line that s the red line. And then you have these blue bars. Here kinda looks like a bar graph the blue bars. That s called the histogram.
So those are the three parts you need to pay attention to with the macd. So what are these three parts. While the black line. That s the macd line now on the standard macd settings.
And so if you go to stock charts. Dot com. They ll by default they ll put it on the standard settings on the standard macd settings. The macd line.
It is the 12 day exponential moving average minus the 26 de exponential moving average. So that s the mathematical formula for the black line. But you don t really necessarily need to know all of the math involved in it you just want to know for now since we re just doing the basics you want to know that the the black line. The macd line it gives the short to medium term trend of the price action in other words has the stock been trending up or down.
Or sideways. Ok. So you can see which way in the short to medium term in the past with the black line. The macd line.
You can you can glance at it. And quickly tell whether it has recently whether the the stock or commodity or etf for currency or whatever whether the price action. Lately has been going down or up or sideways over here. Here at jumped up word.
It s a quick way to gauge the short to medium term trend of the price action. That s the macd line. What about the red line that s the signal line well on the standard macd settings. It is the nine day exponential moving average of the macd line or the black line ok.
So basically the signal line. The red line is just a smooth out less choppy version of the macd line. So the as you can see the the red line. Yeah.
It doesn t chop around as much it smoother compared to the macd line and the signal line is that s less choppy. It s more smoothed out because it s a moving average of the macd line to put it very simply people who use the macd can use it as a buy or sell signal and of course. It s not a perfect indicator. It does not work every single time.
I don t know any indicator that does so be aware of that so it can be used however as a possible buy or sell signal people they might buy when the macd line crosses above the signal line like it does here. And here ok and they might sell when the macd line crosses below. The signal line like it does here crosses below or here crosses below. What about the blue bars.
That s called the histogram on the standard macd settings. It is the macd minus the signal line basically it just shows how far above or below the mac. The macd line is in relation to the signal line. So how far above or below.
Is the macd line compared to its signal line alright. So like for example over here. We can see that the macd line is above the signal line ok. It s you can see over here.
They re about the same and so the histogram shows that they re about the same and then as the macd line goes. More and more further above the signal line. The histogram grows taller and taller now over here. We can see that the macd line is about the same as the signal line and so.
The histogram is flat and then as it goes more and more below its signal line. The histogram reflects that it shows it by going lower and lower so it just shows how far above or below. The macd line is compared to its signal line or for example. Over here.
They re pretty close together. And the histogram is flat. The macd is a quick way to gauge the trend of the price action and the histogram can help to assess the velocity of the upward or downward movement how quickly in other words is it going up or down. What s the velocity.
The histogram shows here that it s going down faster and faster and over here. It s showing. It s going up faster and faster and over here. And here s a long stretch of it just kind of going sideways maybe with a slight upward bias.
But mostly sideways the relation of the macd line to the signal line in other words is the macd line crossing above or below the signal line can be used as a possible buy or sell signal as well alright. So that s my basic introduction to the macd. I hope it was helpful and you can add it to your your toolbox or arsenal. So to speak of indicators.
Alright. So if you like this video. Please give it a thumbs up on youtube and leave comments and subscribe to my youtube. Channel and you can contact me by email anytime at david modell gmailcom.
If you have questions or you want to make a comment or if you just want to put together a trading plan by all means feel free to email me anytime. Thanks a lot i appreciate it and i ll talk to you again soon also before i forget i just wanted to dedicate this video to wendy hi wendy and also i plan on putting out a newsletter or even a couple of newsletters possibly. So just let me know if you d be interested in possibly receiving a weekly email with a newsletter possibly on marijuana stocks my favorite pics or options my favorite options trades every week or you know what else would you be interested in receiving information about. So you let me know my email.
Address once. Again david modell. Gmailcom. Or leave comments.
Letting me. Know what you might be interested in seeing what kind of information you want and also what do you want to see in future videos. I d like to see that as well thank you so much i appreciate it and i ll talk to you soon. Thank you for watching please like comment and subscribe and ” .
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