Understanding Max Iwamoto's "MACD" Part 3 [Max Iwamoto]

Max Iwamoto Profile

Iwamoto Keisuke. As the nickname “Mid-level dropout certified technical analyst” implies, he is a rare no-education analyst in the industry. Even in an era where educational background heavily matters, he fights daily against the FX market where such factors are irrelevant. With a desire that “now is a time when anyone can start FX easily, so you should also acquire skills that let you keep winning,” he serves as a columnist and seminar lecturer.

*This article is a reprint/edit of an FX Strategy.com May 2018 issue article. Please note that the market information written in the main text may differ from current market conditions.

There are four trading signals in total

This time, to utilize MACD more practically, we will discuss the “strengths” and “weaknesses” of each trading signal. First, as with any technical indicator, even if there are similar market situations, no market ever visits exactly the same conditions. To consistently and stably profit in a market, a deep understanding not only of the strengths but also of the weaknesses is indispensable. By grasping the weaknesses, you can predict what they mean when you encounter a false signal and what is more likely to happen in the future, and you can handle drawdowns appropriately.

There are four MACD trading signals in total.

① Increase/decrease of the histogram

② Cross of MACD and signal line

③ Cross of MACD and the 0 line

④ Cross of the signal line and the 0 line

These are the four. They are sometimes introduced in parallel, but that leads to confusion and renders them unusable. It is important to consider and separate each signal based on its characteristics.