MACD Oscillator

 

MACD oscillator description

Among the large number of tools, offered to work in the market of binary options trading, there are some popular by many players, as they are not only simple, but also successfully perform the assigned tasks. MACD is among such tools, which can help a player to find some reliable information about assets sentiment.

Moving Average Convergence/Divergence is a typical example of one of the most popular trend oscillators for binary options successfully combining the role of the indicator too. Its author is J. Appel, who developed it in 1979 to work with shares. Nowadays, despite the fact that a lot of attractive instruments have appeared during this long time, it has not lost its relevance; it is also actively used as an oscillator, an indicator, and a separate strategy, and as an important tool for simple and complex trading systems. This classic oscillator is simple, flexible in settings, and its data is easy to read and make the right positions to invest not only in options, but also in Forex. Like other similar tools MACD is built on a chart in a separate field that, certainly, is convenient for trading.

The basis of the tool is the use of 2 moving averages, which are not displayed on the chart, only their indications are written down there. So, it defines how they converge and diverge. At the same time, it is displayed on the chart as a histogram with a line: the role of the histogram is to show the divergence parameters of those moving averages (when one moving average moves away from the other, the columns grow and vice versa). So, in a strong trend columns are long, in flat are, on the contrary, short. The peculiarity and one of the benefits of this tool is to see the opportunities for entry and use them faster than other trading participants. Due to the fact that the data are given in advance, because of an early appearance of divergences on the chart, it can be used to predict the moments of reversals.

Sign in by broker’s terminal, add the MACD oscillator to the chart, and see what happens

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Calculating formula

MACD = EMA (CLOSE, 12) – EMA (CLOSE, 26)

SIGNAL = SMA (MACD, 9), where:

EMA — exponential moving type,

SMA — simple moving type,

SIGNAL — signal moving.

 

Oscillator benefits

As we have already mentioned above, today it is one of the most frequently used tools for analyzing the change in assets. Moreover, it is difficult to imagine work on market research without it, because it allows you to monitor market sentiment and enter the trading when it will be really profitable. It will be convenient both to the professional, and the beginner that, certainly, is also its advantage.

The thing is that it manages to combine information about the trend, and also impulse indicators. It is essential for the identification of extrema and intersections. In addition, we can confidently consider that this tool is almost one of the best today, because it generates a sufficient amount of valuable material for work: it is information about sentiment of different parties – trading participants, and data on possible reversals, divergences, etc.

It can be used in the strategy when working with any assets, on any time ranges (both short-term and long-term investments). Due to the fact that its work is based on moving averages, it is able to generate data on current market sentiment. It also allows MACD to supply their data in advance, which is especially important during trading. This tool will be a good assistant to the trader with the active action of one of the parties in the market, and in flat. Thanks to the work with divergence/convergence is possible to work with signals that predict the beginning of a new trend. It is convenient to work with, and its data is easy to interpret – you should not have an impressive trading experience to use it (learn binary options trading).

 

How to add MACD to MetaTrader 4?

In this program, the oscillator is available immediately after its installation, which is convenient. Working in the legendary trading software is simple and clear. In order to add MACD to the main workspace, you need to follow the way: «Insert» —«Indicators» — «Oscillators». After choosing you can customize it here. Then pressing the button «ОК», start working with it:

How to add MACD to MetaTrader 4

 

How to add MACD to MetaTrader 5?

If you want to work with the updated version of the legendary trading software, you should perform exactly the same actions when working with MT4. Selecting MACD in the list of oscillating instruments, it remains only to perform its settings. Next, by clicking «OK», you can work with its information:

How to add MACD to MetaTrader 5

 

How to add MACD to a broker’s terminal?

One of the leading brokerage companies FiNMAX offers to the client several options for the analysis of the market sentiments. Among them are oscillators, for example, MACD. You can choose one or another instrument from the available ones in the main trading space. Just click on it. Since the terminal does not allow you to configure the tools, which is inconvenient, because it limits the ability of the players, then, after adding the tool to the chart, you can immediately get to work.

In the trading space of this trading firm there is also a tool that we are describing. All indicators and oscillators are available in the lower toolbar. To select the necessary of them, you only need to click on it. Its setup window opens. To add it to the chart all you need is to press the button «Build».

  • ExpertOption

The convenient platform of this brokerage company offers also a set of tools for analyzing the dynamics of market sentiment. Oscillators are placed directly in the main working space of the program:

How to add MACD to a broker’s terminal

By clicking on the «Indicators» button, players can get acquainted with the list of available tools and choose some of them to work with:

How to add MACD to a ExpertOption terminal

Next, you can configure the tool and by clicking «Apply» button, add it easily to the chart and continue working in the program.

 

How to install the oscillator into the terminal?

As you know, the more convenient and functional the terminal is, the more opportunities are available for the player, the more options for working with asset analysis and earnings. If such programs have many options, if they are easy to learn, do not hang during operation, they are interesting to traders. Among the convenient options is the ability to add new oscillators to such a program. Why is it necessary? Thanks to this option, you can upload any tools to the platform and carry out any strategies, thereby increasing the efficiency of your work, using different data about signals. At the same time, this option is not available in every platform, which does not prevent players from having accounts with brokers and those standard platforms that offer them much more opportunities. These are, for example, MT4 (or MT5), where you can freely install any tools, including robots and advisors.

Certainly, MACD is presented here as a standard tool, but it can also be that it will not be in the program, so you should know how you can add it to the platform. First, you should find its files on the Internet. Now you can start working in the program by going to its data directory. Here you need to follow the way: «MQL4» — «Indicators»:

How to install the oscillator into the terminal

Exactly, in this place you can see the list of files installed by the player in the program earlier:

How to install the MACD oscillator into the terminal

You can also add the files of the tool we described here. Now it is in the program, it remains only to restart the terminal (you should close and open it again), check whether it is displayed in the user tools folder:

How to install MACD into the MT4

 

MACD trading signals

The intersection of the signal moving average:

  • When MACD, crossing the line, directs upwards, it is preferably to open the CALL bets.
  • When it crossing it, directs downwards, it is preferably to open the PUT bets.

Histogram signals:

  • If it is increasing (it means, its previous column is below the next one), regardless of where it is located (below or above zero), bullish sentiment dominates, it is recommended to place the bets on increase.
  • If, on the contrary, it decreases (it means, its previous column is higher than the next one), bearish moods dominate, it is recommended to place the bets on decrease.

Divergences:

  • Divergence (by bullish divergence) occurs when the peaks of the price are not confirmed by information of MACD. it is necessary to make the CALL deals.
  • Convergence (by bearish convergence) occurs when the floors of the price are not confirmed by MACD. it is necessary to make the PUT-contracts.

 

MACD signals in MetaTrader 5

  • Signal moving crossings:

Transaction completion UP:

MACD signals in MetaTrader 5: transaction completion UP

Transaction completion DOWN:

MACD signals in MetaTrader 5: transaction completion DOWN

  • Histogram signals

Bull transactions:

MACD signals in MetaTrader 5: bull transactions

Bear transactions:

MACD signals in MetaTrader 5: bear transactions

  • Divergences

UP value contracts:

MACD signals in MetaTrader 5: UP value contracts

DOWN value contracts:

MACD signals in MetaTrader 5: DOWN value contracts

 

MACD signals by Binomo

  • Signal moving crossings:

CALL transaction completion:

MACD signals by Binomo: CALL transaction completion

PUT transaction completion:

MACD signals by Binomo: PUT transaction completion

  • Histogram signals

Bull transactions:

MACD signals by Binomo: bull transactions

Bear transactions:

MACD signals by Binomo: bear transactions

  • Divergences

UP value contracts:

MACD signals by Binomo: UP value contracts

DOWN value contracts:

MACD signals by Binomo: DOWN value contracts

 

MACD signals by Expertoption

  • Signal moving crossings:

Transaction completion UP:

MACD signals by Binomo: transaction completion UP

PUT transaction completion:

MACD signals by Binomo: PUT transaction completion

  • Histogram signals

Bull transactions:

MACD signals by Binomo: bull transactions

Bear transactions:

MACD signals by Binomo: bear transactions

  • Divergences

UP value contracts:

MACD signals by Binomo: UP value contracts

PUT value contracts:

MACD signals by Binomo: PUT value contracts

 

Strategies with MACD

  • Multiple

It is one of the trading techniques based on the indications of MACD, including the data of complex instruments, and MACD is among them. Here we will talk about such a system based on the signals of MACD MTF that means «MACD with Multitime Frame». Its principle of operation is the same as of MACD, but the main difference of the complex tool is that here the time parameters are taken into account in the calculations. The benefit of this modification of the classical instrument is that it makes possible to find stable market sentiment easily, which increases the quality of signals, although they become less. You can work on the strategy easily: making bets on increase occurs when crossing from below the yellow line, while the dot should be green; making bets on decrease occurs when crossing from the top the yellow line, while the dot should be red.

The most part of traders know that the use of several tools at once will increase the accuracy of data on asset dynamics, filter out false indicators and market noises. This technique is based on the work of MACD and RSI, and here exactly RSI acts as a filter. MACD is able to determine the strength of current market sentiments, as well as the most profitable points to enter the market. RSI also determines the prevailing market sentiment, as well as those areas when it comes to their change to the opposite trend.

To execute the contracts for increase you should identify the following set of tool indications on the chart: RSI shall cross the mark 30 from below and start to show a rising trend, while the white line MACD is gradually reversing, and the price shows the closing of the rising green candlestick. To execute the contracts for decrease, you should identify the following set of tool indications on the chart: RSI shall cross from below the indicator 70 and begins to show falling trend, the white line MACD is gradually reversing, and the price shows the closing of the falling red candlestick.

  • «Turbo MACD»

This trading tactic is focused on working in the platform Binomo, which is characterized by the availability of unique tools and a large set of assets to work with, which guarantee the effectiveness of trading. This system is based on one oscillator application, MACD, which is used here in three variations, generates accurate data on market sentiment and immediately acts as their confirmation. Tactics allows you to get about 90% of profitable trades.

To place a bet in the direction of increase of asset sentiments, the following data should be identified on the chart: when the lines of long and standard MACD show the intersection with rising of positions up; while the moving averages of the short MACD cross the zero mark up. To register the rates in the direction of decrease of asset sentiments you should identify on the chart the following data: when the lines of long and standard MACD shows the intersection at the direction of falling down; moving averages of the short MACD cross down the zero mark.

  • «MACD correction»

One of the trading tactics that is popular among traders due to the simple operation and generation of accurate data to enter a position. Its specific aspect is that the data of moving averages and MACD – highly effective, but simple and clear analyzers, familiar to all players, are used to search for signals and allow you to catch those fluctuations in value easily that are usually not noticed. At the same time, MA acts as a demonstrator of the trend direction, and MACD shows the rollbacks of quotations, which will allow the player to get his profit. The effectiveness of this tactic is about 150% of the inflow of earnings to the account.

To place a bet in increase you should wait for the formation of the following indicators of the instruments on the chart: MA shows descending trends, moving downwards; the cost decreases below MA, at the same time MACD is falling under the axial moving average, intersects here in an upward direction; while its histogram is built above the zero axis. To register the rates in decrease you should wait for formation on the chart the following indications of the tools: MA shows the rising sentiment, moving up; the cost rises above the MA, at the same time MACD, being above the axial moving average, intersects here in a downward direction; its histogram is built below the zero axis.

  • «МА with MACD filter»

The specific aspect of this trading tactic is that here are used the tools familiar to the player, they act as an identifier of data for entering the market and immediately for filtering them. All this allows getting a confident trade with such signals that will bring profit to the player, which will be effective and will allow him to increase the size of his account. The advantage of the method is that the risks are significantly reduced here. As for its composite instruments, the indicators 2 MA (in the format of WMA and EMA) and MACD are used here, which acts as a filter of data generated by moving averages.

To enter a position with UP option, you shall expect on the chart the appearance of the following combination of the technique indicators: WMA shall cross EMA, moving up; at the same time MACD is located above the level 0 and goes up. To enter a position with DOWN bet, you shall expect on the chart the appearance of the following combination of the technique indicators: WMA shall cross, EMA, moving down; at the same time MACD is located below the level 0 and goes down.


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