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[MACD]

MOVING AVERAGE CONVERGENCE DIVERGENCE

Hello traders, today I will explain you about one of the best indicator (MACD) which is used by many of the traders for both long and short term.

Q) What is MACD?

Ans) Basically it is momentum (how fast the speed of the stock price changes) indicator. It is used by traders to know if there is a bullish or bearish movement in the stock and decide their entry or exit position.

Q) What setting to be change in MACD so that it is easier to read?

Ans) I prefer Trading View for chart analysis so I will tell according to that.

At the top of the box click on Style then under Histogram

color 0 and color 1 - green colour

color 2 and color 3 - red colour

Then under MACD

color 0 - green colour

Then under Signal

Color 0 – red colour

That’s all no other changes needed.

Q) How to read MACD lines and histogram

Ans) You have to only see the red line (Signal) and the green line (MACD). If the green line cut the red line from down then it is a bullish signal usually it happen below the histogram and if green line cut the red line from up then it is a bearish signal usually it happen above the histogram.

Q) During which time frame should we use MACD?

Ans) For day trading (in nifty and bank nifty) or intraday use 5 minutes and 15 minutes. For swing trading use 1 day. Avoid using this indicator in 1 minutes time frame because it is not so accurate.

Q) When to wait even if the MACD given the signal to buy or to sell the stock?

Ans) If the green line cut the red line from up or down but it is near the histogram then generally it is small move in the stock. But when it cut far from the histogram either above or down then there is a big move. Cut very far from histogram more big is the movement in the stock (Directly Proportional).

Q) Sometimes there is a false Indication in MACD so how to make it more accurate?

Ans) But sometimes there is a false movement in MACD so do not only use it as the only indicator for the stock price. I suggest you to use the indicator supertrend and ADX with MACD. By using this it will save you from false indication of MACD.

I WILL ALSO POST THE BLOGS ON ADX AND OTHER INDICATORS

DISCLAMIER:

It is only for educational purpose which I have studied and test in the market. Any decision you take during the market is your own responsibility.

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