Home

MACD Charts. What is MACD? MACD stands for Moving Average Convergence Divergence. This technique is one of the most often used by the day trading simulator software as performing the technical analysis of stock trend using this method is easy and very straightforward. The technical indicator macd works well both for a "long term" and intraday trading system trading. The technique is based on analyzing the DISTANCE between two moving averages. Are they moving closer? Are they intersecting? Are they moving away? In a typical "minimum" case (that is probably the best for practical applications) we would have two moving averages, one for the short period and one for the long period. A single "day trading rule" applies : The intersection of these two lines is a trading signal. The macd formula, so to speak, is usually based on exponential moving averages, meaning that earlier points have less weight than latest ones. Signals on the MACD charts Take a look at the following chart, generated from the historical data provided by the Stock Downloader program. As you can see, the two moving averages are moving fast and in different directions, so the signals are not necessarily clear. If we select longer intervals for the average, there will be less signals and each of them will represent a larger move of the stock price. The main disadvantage of the MACD indicator is the fact that it is FOLLOWING the price, rather than predicting it. Which is fine IF (and it is a big if) stock market is not changing rapidly. When choosing the intervals for the fast and slow MAs, we are usually testing them against existing historical data for the stock. Now, if the stock behaviour suddenly changes, the previous testing becomes useless! You can speed up the optimization process by performing the testing using Trader software. Not only will it test different combinations of intervals, but also it can use some additional twists on the technique, like reversing the signals or using shorts.

NLP, Hypnosis, Power	Building a small profitable site	Habit Management
Free E.mail Autoresponder	Tree-like flow charts	Tools for webmaster
Stock Trading	Neural Networks

Old locations:

Building a small profitable Web site	Tree-like flow charts	NLP, Hypnosis, Power
Shareware for Stock Trading	Neural Networks

Home