MACD Basic Profitability Tips

In the existing technical analysis software, the common parameters of MACD are the fast smoothed moving average of 12 and the slow smoothed moving average of 26. In addition, MACD also has an auxiliary indicator - the bar (BAR). In most futures technical analysis software, the bar is colored. Below the 0 axis is green, and above the 0 axis is red. The former represents a weak trend, and the latter represents a strong trend.

Here are the basic principles that should be followed when using the MACD indicator:

1. When DIF and DEA are above the 0 axis, they belong to the long market. When the DIF line crosses the DEA line from bottom to top, it is a buy signal. When the DIF line crosses the DEA line from top to bottom, if the two line values are still running above the 0 axis, it can only be regarded as a short-term decline, and the trend turn cannot be determined. Whether to sell at this time needs to be comprehensively judged with the help of other indicators.

2. When DIF and DEA are below the 0 axis, they belong to the short market. When the DIF line crosses the DEA line from top to bottom, it is a sell signal. When the DIF line crosses the DEA line from bottom to top, if the two line values are still running below the 0 axis, it can only be regarded as a short-term rebound, and the trend turn cannot be determined. Whether to buy at this time needs to be comprehensively judged with the help of other indicators.

3. Column contraction and amplification. Generally speaking, the continued contraction of the bar indicates that the intensity of the trend operation is gradually weakening. When the color of the bar changes, the trend determines a turning point. But in the use of some MACD indicators with short time periods, this view cannot be fully established.

4. Patterns and deviations. The MACD indicator also emphasizes patterns and deviations. When the DIF line of the MACD indicator and the MACD line form a high bearish pattern on the pattern, such as head and shoulders,XM ForexDoubles, etc., should be vigilant; and when the MACD indicator DIF line and the MACD line form a low bullish pattern on the pattern, you should consider buying. When judging the pattern, the DIF line is the main one, and the MACD line is supplemented. When the price continues to rise, and the MACD indicator goes out of a wave lower than the wave, it means that the top divergence appears, indicating that the price may turn down soon. When the price continues to decline, and the MACD indicator goes out of a wave higher than the wave, it means that the bottom divergence phenomenon appears, indicating that the price will soon end its decline and turn up.

5. Indicators in the bull market will be distorted. When the price does not run from top to bottom or bottom to top, but keeps moving in the horizontal direction, we call it the bull market. At this time, false signals will be generated in the MACD indicator, and the intersection of the indicator DIF line and the MACD line will be very frequent. At the same time, the retraction of the columnar line will also appear frequently. The color will often change from green to red or from red to green. At this time, the MACD indicator is in a state of distortion, and the value of use will be reduced accordingly.

Using the curve shape of DIF to analyze, mainly using the principle of indicator phase deviation. Specifically: if the direction of DIF deviates from the direction of stock price, it is the time to take specific actions. However, according to the above principles to guide the actual operation, the accuracy is not satisfactory. After practice, exploration and summary, the comprehensive use of 5- and 10-day average price lines, 5- and 10-day average lines and MACD has greatly improved its accuracy.