the macd indicator explained simply and understadably. // macd trading strategy, macd histogram, macd ema, macd explained, macd strategy, macd trading, macd forex, macd tutorial, macd indicator strategy, macd indicator settings, macd indicator tutorial, macd settings, macd indicator settings, macd stock trading, macd stock, macd signal, macd setup, macd analysis, macd basics, macd crossover, macd crossover strategy, macd for beginners, macd formula, macd trading system, macd two lines welcome to looking at the markets with david moadel i have received requests to discuss the macd and so let's go ahead and do that
what's up with apple stock, alright here we go what is the macd well i'm using apple as an example today apple stock and this is a daily chart each candlestick represents one day of
price action and my chart came from stock charts dot-com just want to give them credit alright so the macd is a quick way of saying moving average convergence divergence macd it's a lot easier to say macd so we'll just go ahead and call it that alright so what is all that stuff mean
it is a momentum indicator that means that it tells the general direction okay so are we looking at a stock that in the short to medium term does it has tended to trend upward downward sideways so that's what it does it tells the general direction in the short to medium term now you have several parts to the macd indicator you have the black line
and that is right here you can see the black line and that is called the macd line that's the that's the black line then you have the red line and that is called the signal line that's the red line and then you have these blue bars here kinda looks like a bar graph the blue bars that's called the histogram so
those are the three parts you need to pay attention to with the macd so what are these three parts while the black line that's the macd line now on the standard macd settings and so if you go to stock charts dot-com they'll by default they'll put it on the standard settings on the standard macd settings the macd line it is the 12-day
exponential moving average minus the 26 de exponential moving average so that's the mathematical formula for the black line but you don't really necessarily need to know all of the math involved in it you just want to know for now since we're just doing the basics you want to know that the the black line the macd line it gives the short-to-medium term
trend of the price action in other words has the stock been trending up or down or sideways ok so you can see which way in the short to medium term in the past with the black line the macd line you can you can glance at it and quickly tell whether it has recently whether the the stock or
commodity or etf for currency or whatever whether the price action lately has been going down or up or sideways over here here at jumped-up word it's a quick way to gauge the short-to-medium term trend of the price action that's the macd line what about the red line that's the signal line
well on the standard macd settings it is the nine-day exponential moving average of the macd line or the black line ok so basically the signal line the red line is just a smooth out less choppy version of the macd line so the as you can see the the red line yeah it doesn't chop around as much it smoother compared to the macd line and
the signal line is that's less choppy it's more smoothed out because it's a moving average of the macd line to put it very simply people who use the macd can use it as a buy or sell signal and of course it's not a perfect indicator it does not work every single time i don't know any indicator that does so be aware of that so it can be used however
as a possible buy or sell signal people they might buy when the macd line crosses above the signal line like it does here and here ok and they might sell when the macd line crosses below the signal line like it does here crosses below or here crosses below what about the blue bars that's called
the histogram on the standard macd settings it is the macd minus the signal line basically it just shows how far above or below the mac the macd line is in relation to the signal line so how far above or below is the macd line compared to its signal line alright so like for example over here we can see that the macd line is above
the signal line ok it's you can see over here they're about the same and so the histogram shows that they're about the same and then as the macd line goes more and more further above the signal line the histogram grows taller and taller now over here we can see that the macd line is about the same as the signal line and
so the histogram is flat and then as it goes more and more below its signal line the histogram reflects that it shows it by going lower and lower so it just shows how far above or below the macd line is compared to its signal line or for example over here they're pretty close together and the histogram is flat the macd is a quick way to gauge the
trend of the price action and the histogram can help to assess the velocity of the upward or downward movement how quickly in other words is it going up or down what's the velocity the histogram shows here that it's going down faster and faster and over here it's showing it's going up
faster and faster and over here and here's a long stretch of it just kind of going sideways maybe with a slight upward bias but mostly sideways the relation of the macd line to the signal line in other words is the macd line crossing above or below the signal line can be used as a possible buy or sell signal as well
alright so that's my basic introduction to the macd i hope it was helpful and you can add it to your your toolbox or arsenal so to speak of indicators alright so if you like this video please give it a thumbs up on youtube and leave comments and subscribe to my youtube channel and you can contact me by email anytime at david modell @ gmail.com if
you have questions or you want to make a comment or if you just want to put together a trading plan by all means feel free to email me anytime thanks a lot i appreciate it and i'll talk to you again soon also before i forget i just wanted to dedicate this video to wendy hi wendy and also i plan on putting out a
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