It has been a while since our last post. Due to trading and appointments we were not able to put news on the table. We will now continue writing since we have more time to. Today we will talk about different indicators, today the MACD.
Lets begin with the MACD. As most traders know, the MACD indicator is not a real time indicator. It gives you information about the markets but some kind of lagg. Real time trades therefore can't rely on the indicator becouse it is not real time. Though, it is usefull for the long term trend indication.
The MACD usually is used with Fast Length 12, Slow Length 26 and signal length (optional) 9. This indicates the normal MACD as you all know. How to make the MACD usefull for your trading? Combining it with the bars to count it creates one of the moste usefull indicators (especially for longer term).
As seen on the picture below, the MACD has crosspoints where the blue line crosses the red one. This indicates a turn of the market sentiment. Depending on the timeframe, is gets more reliable on the longer term.
So why do I need to combine it then? Because the MACD and bars together gives you the perfect view of the markets sentiment. Bars going down together combined with the blue line crossing the red one? The sentiment is turning bearish, and vice versa.
Because the indicator is for the longer term and is not real time, it is not recommended to use it to trade indices, why? Because the market closes and opens every day. When opening, this indicator is not reliable because of the possible gap. This gives a bad view of the real time market.
More useful is it for forex because this market does not close till the weekend. So to all of you trading. Please use this indicator wisely for forex and not for indices and stocks.
Have a nice trading week ahead.
Kind regards,
Team BusinezzTime
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