The King of Technical Indicators: MACD
In the financial market, many investors use technical indicators to help determine the direction of the market and determine the buying and selling points. However, there are many types of technical indicators, and different indicators have different usage methods and calculation logic. Investors are just beginning to contact technical analysis. In the first half of the article, Lewis will give a brief introduction to the indicators of technical analysis. In the second half of the article, Lewis writes this article to share with you that the first choice for technical indicators is the MACD technical indicator.
What are the technical indicators？
The so-called technical indicators are mostly calculated through specific formulas based on basic data such as market prices and trading volumes, and are graphically used to facilitate investors to determine the basis for market transactions. Therefore, they are loved by many investors in the market. Began to specialize in technical indicators as a tool for operation, and Lewis has been involved in mainstream technical indicators, and has also used many technical indicators in actual combat.
Technical indicators can be simply divided into trend technical indicators and swing technical indicators, the functions of the two are not the same!
Trend-type technical indicators are mainly used to judge the trend direction, not mainly used to make decisions about buying and selling points
Swing-type technical indicators are mainly used to judge the relative strength of the market, and are mainly used as the basis for decision-making on buying and selling points.
Therefore, investors must first figure out which type of technical indicators they use.
But in summary, the most basic tool for novices and the most profitable tool is actually the trend indicator MACD.
What is the MACD technical indicator？
This technical indicator is a trend indicator. It is mainly a reference to assist investors in judging the market direction. This technical indicator uses the exponential moving average (EMA) as the calculation parameter. Compared with Simple Moving Average (SMA), EMA has A more reasonable calculation method. Simple Moving Average (SMA) calculates the closing price of each day with equal weights, which does not conform to the logic of kinetic energy strategy. Therefore, EMA is more accurate than SMA in judging the trading opportunities of market turning. MACD uses the average value of EMA to make two line segments (MACD Line & Signal Line), which leads to a cross over transaction signal.
Blue line: fast line, orange line: slow line. The difference between the blue line and the orange line is the columnar (OSC)!
How to apply MACD indicator operation？
First of all, investors must first understand the display method of MACD technical indicators. The way to quickly distinguish whether the current market is an uptrend or a downtrend is to determine whether the fast line and the slow line are above or below the zero axis. The following content path sorts out what the Bull Market and Bear Market should be.
Strong Bull Trend: MACD is above the zero axis and is a multi-cube
Weak Bull Trend: MACD is above the zero axis and is an empty square cylinder
Strong Bear Trend: MACD is below the zero axis and is an empty square cylinder
Weak Bear Trend: MACD is below the zero axis and is a multi-cube
When many investors are new to MACD, they only use the color of the column to determine the direction of the market. This is the core point of the MACD technical indicator. It must be combined with the zero line to comprehensively judge the strength and weakness, which is the correct action.
[MACD example explanation]
Example: GBP/USD 1HR Chart
In this quotation, we have to judge the current market trend, there are the following SOP!
STEP1: First observe whether the MACD technical indicators are above or below the zero axis
Confirmation below the zero axis indicates that it is currently a downtrend, so we only conduct Sell transactions and not buy transactions
STEP2: When the MACD indicator column turns red, it is in line with the Strong Bear Trend we reminded before, so we can conduct Sell trading (White Arrow)
STEP3: When the MACD column turns green, we can exit the market and make a profit.
If this is under a period of short-handed market conditions, there will be a chance to accumulate a lot of gains and increase the benefits of foreign exchange operations.
A set of efficient methods will only have a chance of profit in the long run.
Investors can make good use of MACD technical indicators and other technical indicators for common use. In addition to finding the right trend direction, we can also use swing indicators to help us capture a more beautiful entry position under the premise of taking advantage of the trend. Create a better rate of return for us.
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