MACD Indicator and Currency Trading
Did you know that using an MACD Indicator can help you strengthen the success rate of your forex trading strategy?
MACD is an acronym for Moving Average Convergence Divergence and it can help you determine which trades are more likely to result in a profitable outcome and which trades you should be avoiding or trading short.
The foreign currency market is one which moves at a rapid pace. A trade which can do quite well for you at one moment can suddenly become a loss in the space of just a few hours.
Success in the Forex market depends on using strategies and tools which help you to minimize losses and maximize the profitability if your trades. A MACD indicator helps you to track upwards trends in currency prices in real time, as well as spotting when a currency has peaked and is headed downwards.
How Do MACD Indicators Work?
The MACD is composed of a few different moving average indicators, each of which is pretty straightforward. One is the signal line (also known as the water line). This shows you the exponential moving average (EMA, for short) drawn from closing prices over the last nine days of trading in the currency market.
There are two other EMA`s which let you see the trends of any given currency. These are a 26 day EMA and a 12 day EMA. These longer term trends give you an accurate idea of how the currency has been performing; valuable information to assist you in making more profitable trades.
The MACD line will show either above the EMA line or below the EMA line, which gives you an idea at a glance of whether the currency pairing youre considering for your trades are on an upward trend or on a downward trend.
Using A MACD Indicator For Forex Trading
Once you learn how to read the charts and come to an understanding of what the MACD`s movements mean you will be able to make better trades more easily. As any experienced Forex trader can tell you, knowing the trends in the foreign currency exchange market makes all the difference. Thanks to the one and four hour charts your MACD indicator will give you, you`ll be able to see the prevailing trends in the market and take advantage of them.
By learning to watch both sets of charts you should be able to pin point which currencies are trending upwards and which are trending down. When both the 4 hour and the 1 hour MACDs are trending up your chances of entering a profitable trade are more likely.
Before placing any trades, you should consult your hourly chart to see how the MACD indicator is moving. If the MACD indicator is above the waterline, then you have better odds of making a profitable trade by going long.
Of course its important to recognize that no single indicator will give you accurate trading results every time. This particular charting system works best when used in conjunction with other signal indicator software and tools as well. However if you do choose to use it on its own to monitor the movements of particular currencies then it is possible to use the MACD indicator to give you a higher chance of trading profitably.
If you`d like to make the most of your Forex trades and minimize your risk, then a MACD indicator is an investment in your Forex trading success that is certainly worth your consideration. - 23208
MACD is an acronym for Moving Average Convergence Divergence and it can help you determine which trades are more likely to result in a profitable outcome and which trades you should be avoiding or trading short.
The foreign currency market is one which moves at a rapid pace. A trade which can do quite well for you at one moment can suddenly become a loss in the space of just a few hours.
Success in the Forex market depends on using strategies and tools which help you to minimize losses and maximize the profitability if your trades. A MACD indicator helps you to track upwards trends in currency prices in real time, as well as spotting when a currency has peaked and is headed downwards.
How Do MACD Indicators Work?
The MACD is composed of a few different moving average indicators, each of which is pretty straightforward. One is the signal line (also known as the water line). This shows you the exponential moving average (EMA, for short) drawn from closing prices over the last nine days of trading in the currency market.
There are two other EMA`s which let you see the trends of any given currency. These are a 26 day EMA and a 12 day EMA. These longer term trends give you an accurate idea of how the currency has been performing; valuable information to assist you in making more profitable trades.
The MACD line will show either above the EMA line or below the EMA line, which gives you an idea at a glance of whether the currency pairing youre considering for your trades are on an upward trend or on a downward trend.
Using A MACD Indicator For Forex Trading
Once you learn how to read the charts and come to an understanding of what the MACD`s movements mean you will be able to make better trades more easily. As any experienced Forex trader can tell you, knowing the trends in the foreign currency exchange market makes all the difference. Thanks to the one and four hour charts your MACD indicator will give you, you`ll be able to see the prevailing trends in the market and take advantage of them.
By learning to watch both sets of charts you should be able to pin point which currencies are trending upwards and which are trending down. When both the 4 hour and the 1 hour MACDs are trending up your chances of entering a profitable trade are more likely.
Before placing any trades, you should consult your hourly chart to see how the MACD indicator is moving. If the MACD indicator is above the waterline, then you have better odds of making a profitable trade by going long.
Of course its important to recognize that no single indicator will give you accurate trading results every time. This particular charting system works best when used in conjunction with other signal indicator software and tools as well. However if you do choose to use it on its own to monitor the movements of particular currencies then it is possible to use the MACD indicator to give you a higher chance of trading profitably.
If you`d like to make the most of your Forex trades and minimize your risk, then a MACD indicator is an investment in your Forex trading success that is certainly worth your consideration. - 23208
About the Author:
About the Author: Samo Yanezic is the Webmaster of Financial Freedom Informant.com - The Net`s Rising Source for Online Home Business Education. Visit Us for more free help and advice. See also this About Forex page.
posted by X - Men @ 4:18 AM
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