The MACD stock indicator and its use in cryptocurrency trading.
The MACD indicator is a technical indicator that was developed by Gerald Appel to analyze stock markets, but later became used to analyze other economic markets. Its main point is to visualize the difference between fast and slow moving averages, which display the average price value for a certain time, where a fast moving one is an average curve with small periods, and a slow one with large ones.
Due to its simplicity and accessibility, as well as a complete visual picture, which is provided in the form of graphs: linear or histograms, everyone, whether a seasoned economist or a simple person who wants to know changes in price, can get the necessary information.
The basis of the Indicator As already mentioned, the MACD is represented in charts where there is also a signal line - this is the average of the MACD indicator itself, which can be calculated using the following formula: SIG = EMA (MACD) – all values are averaged.
It gives a signal that it is possible to open a trade.
If the average goes beyond the histogram, when the indicator indicator is still at the bottom of the chart, then this is a call to buy, and if at the top, then of course, on the contrary, to sell.The ways to represent the indicator are a line chart or a histogram.
Linear MACD formula: MACD line = EMA (12) — EMA.
The formula of the MACD histogram (OSMA): The MACD histogram = the MACD - EMA(MACD) line.
Also, the MACD has its own basic parameters, which contain basic information and help to see the whole picture of the change in the price of the currency.
The period of the slow curve (according to the standard 9 *).2.
The period of the fast curve (according to the standard 12 *).3.
The period of the signal curve (according to the standard 26 *).4.
The type of price to calculate (based on closing prices). These numbers are the best values for this indicator, which are advised to be used by experienced traders (12 days (two weeks), 26 days (month), (reducing the difference) with a period of 9).
Features of patterns Many experts consider this indicator to be one of the most reliable and understandable signals for ordinary people to trade.
This confidence is based on the convergence and divergence of the MACD. Divergence appears when the price sets a new maximum, but the MACD does not. Thus, the main trend is losing weight and there is a possibility of a reversal (trend change). Convergence is the same case, but only at the bottom of the market: prices reach a new low, but the indicator does not.
Similar patterns can be easily found on the charts of different financial markets. Of course, this does not mean that the MACD gives a 100% reliable picture of the market, but it greatly simplifies the perception of changes and makes it easier to track these changes, which contributes to a quick analysis of the market and subsequent correct actions, whether it is selling or buying goods or cryptocurrencies.
To increase the reliability and accuracy of the MACD, additional indicators can also be connected to it, for example, ADX, RSI and others, which can provide additional information about the market. But for simplicity and convenience for novice traders, it is worth first mastering one simple indicator, and then gradually adding others to fully understand market trends.
At first glance, everything seems complicated, but in fact, all this is possible for every person without much effort. You can easily see and analyze the prices that are important to you, as well as adjust your buying or selling decisions. Installing this indicator will not be difficult, and the information itself is always available, you can look at the chart at any time and understand how the situation is on the market and whether it is worth selling the product or it is better to wait, or maybe, on the contrary, buy something.