TNA_EA Lab mastering MACD

About MACD

MACD is useful whether you are using EA or discretionary trading

from scalping

to swing trading using weekly charts

I find it to be

the most useful

indicator that I believe will be helpful.

 

There are different ways to display it.

Figure 1 shows the standard MT4 display and

the original

two-color MACD

The original from TNA_EA Lab

MACD can display the slope with color coding,

which I will explain, but

the principle is the same as the MT4 standard MACD

and there is no difference.

 

Especially for those trading with two moving averages

by

displaying the MACD for that period

you can

read the information easily,

so it has value in display

as an indicator.

 

Basic principle

MACD stands for Moving Average Convergence/Divergence

and is calculated based on two moving averages.

Formula

MACD

＝ value of the short-term exponential moving average

－ value of the long-term exponential moving average

 

Positive/negative values of MACD

Therefore,

when MACD is positive,

the short-term EMA is

above the long-term EMA

.

the short-term EMA is

below the long-term EMA

.

The larger the absolute value,

the further apart the two moving averages are,

the greater the divergence,

in other words, the stronger the trend.

And when MACD is 0,

the two moving averages

are crossing.

In other words,

dead cross or golden cross can also be read from MACD.

Summary of events that can be understood from MACD values and slope

Therefore,

as shown in the figure below,

the chart is classified into four events.

When applied to the chart, it can be organized as shown here.

Using MACD

From the above, MACD indicates

① an uptrend begins

② after a golden cross,

the uptrend converges

③ a downtrend begins

④ after a dead cross,

the downtrend converges

. In other words, from MACD

the uptrend

seems to be starting, so prepare for long entry.

the uptrend

seems to be ending, so take profit.

the downtrend

seems to be starting, so prepare for short entry.

the downtrend

seems to be ending, so take profit on short positions.

These are the rough judgments

that can be made with MACD alone.

Also,

from ② to ③ and not becoming ④,

→ ② is a pullback buying opportunity,

and from ④ to ① and not becoming ②,

→ ④ is a retracement selling opportunity from MACD.

Therefore it is a very usable indicator

and it is recommended for discretionary trading

on any currency pair and any time frame.

TMA_EA Lab Two-Color MACD

Then you can choose moving averages further:

simple moving average (SMA)

exponential moving average (EMA)

smoothed moving average

linear weighted moving average

See Figure 2 for reference

The original two-color MACD from TNA_EA Lab is

described further here.

https://www.gogojungle.co.jp/tools/indicators/47667