Indicators: MACD - page 2

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Indicators: Moving Average of Oscillator (OsMA)

newdigital, 2014.03.21 07:04

Scalping with MACD (based on dailyfx article)

  • Scalpers should look to systematize their approaches and strategies.
  • Multiple Time Frame Analysis can help day-traders see ‘the bigger picture.’
  • Traders can use MACD to initiate positions in a day-trading approach.

When a scalper begins their day, there are usually quite a few questions that need to be answered before ever placing a trade.

What’s moving the market this morning?
Which markets are most active?
What drivers (or news) might come out to push the market further?
Is my coffee ready yet?

These are just a few examples… but suffice it to say that those who are day-trading in markets have quite a bit on their mind every single trading day.

The Setup

Before a scalper ever triggers a position they need to first find the appropriate market environment.

For fundamental-based traders, Multiple Time Frame Analysis can be helpful; but more important is their outlook or opinion and the fact that that outlook or opinion should mesh with the ‘bigger picture’ view of what’s going on at the moment.

For scalpers, the hourly and 4-hour charts carry special importance, as those are the ideal timeframes for seeing the bigger picture.

After that, traders should look to diagnose the trend (or lack thereof).

A great indicator for investigating trend strength is the Average Directional Index (ADX). Also popular for investigating trends is the Moving Average Indicator.


The Entry

After the day-trader has found a promising setup, they then need to decide how to trigger into positions, and MACD can be a very relevant option for such situations.

Because the trader already knows the direction they want to trade in, they merely need to wait for a corresponding signal via MACD to initiate the position.

When MACD crosses up and over the signal line, the trader can look to go long.

After a long position is triggered, the trader can look to close the position when MACD moves down and under the signal line (which is usually looked at as a sell signal, but because you did the ‘bigger picture analysis’ with the longer-term chart, this is merely a ‘close the long signal.’)

Scalpers can trigger positions when MACD Signal takes place in direction of their bias


On the other side of this equation: If the trader had determined the trend to be down on the longer-term chart or if their fundamental bias is pointing lower, they can look for MACD to cross down and under the signal line to trigger their short position.

And once MACD crosses up and over the signal line, the trader can look to cover their short position.

Scalpers can close positions when opposing MACD Signal takes place


The Context

The aforementioned approach can work phenomenally in a day-trading/scalping approach. But the fact-of-the-matter is that scalping profitably entails a lot more than just a trading plan, and an entry strategy.

Risk management is the undoing of most new traders; and day-traders and scalpers fall victim to this susceptibility even more so than most.


 

Please check the MAACD formula again. I see that it is not the same as the recipe published on this page How to Calculate MACD in Excel (investexcel.net)


After calculating according to Excel and comparing with the calculation on TradingView, I found on TradingView they calculated exactly as the formula announced above.


How to Calculate MACD in Excel
How to Calculate MACD in Excel
  • Samir Khan
  • investexcel.net
Learn how to calculate and plot MACD in Excel, and start making better trading decisions. The Moving Average Convergence Divergence (or MACD) indicator is a powerful momentum-based trading indicator. An MACD chart consists of three elements. The first is the difference between the 12-day and 26-day exponential moving average (EMA) of the...
 
good
 
The MACD is traditionally calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. A 9-period EMA of the MACD line is then used as the "signal" line. However, MetaTrader's official MACD implementation differs by using a 9-period simple moving average (SMA) as the signal line instead. For reference, see: MathWorks MACD Documentation. https://www.mathworks.com/help/finance/macd.html
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