Moving Average Convergence Divergence (MACD)

MACD crossover has long been use by trader to spot exit and entry point due to its simplicity. Similar to moving average it make use of the MACD line crossover the Signal line principal to determine the entry and exit point. So let us now look at how MACD work.

This might be familiar to most traders, but my purpose of writing this e-book is so that all level of trader can benefit from it, so I hope all the slightly more experience trader can bear with me.

MACD Indicator settings:

Chart : 15 Minutes
MACD periods: Standard (12, 26, 9)
Entry Rules : When MACD lines (blue color) cross over Signal lines (Red Color) do wait till the current price bar to close before enter the market.
Exit Rules : When MACD lines next cross over occurs.


As you can see from the screen shot above, MACD entry and exit rules is very simple to apply, however constant monitoring is required and it is not suitable to use alone when market it moving sideways as it will generate false signals.