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In this article we will take a look at trading with the MACD , the MCAD is one of the great,reliable and efficient indicator in forex especially for *for novice traders who are used to get in and out of the market too early.
MACD stands for Moving Average Convergence Divergence. It is an indicator used in technical analysis it helps traders see quite a bit of information including the possibility of noticing trend changes at a very early stage of a currency pair?s move.
Before we move ahead lets learn and practice how to apply the MACD indicator. This is the MACD Video Tutorial that would show us exactly how to apply the MACD indicator.
Whiles trading with the MACD ,it is necessary to enhance the strategy or approach the strategy with an additional*basic strategy .To apply MACD on a chart press the indicator button on the tool bar and choose oscillators ( See from the Video above for a detailed explanation on how to do so).
The MACD is used to identify moving averages that are indicates a new trend whether it?s bullish or bearish. If the MACD histogram is above the signal line it signals an uptrend in this case we open only long positions ,sell signals are ignored. If the MACD histogram is below the signal line it signals a downtrend in this case we open only short positions ,buy signals are ignored.
Now we need to identify the entry points ,we can do this with the help of Awesome Oscillator by Bill Williams (Indicated and taught how to apply Awesome Indicator in the video).
The Awesome indicator gives a Buy or Sell signal called a ?Saucer? there will be a red bar after two green bars or a green bar after two red bars .This is the trend reverse signal . We also need to identify when to close the deal, we place the ?Stop Loss? which limits our losses at the level of last fractal.
Moreover we close the deal if we receive an entry signal in the opposite direction.
Happy Trading!.