What is MACD? How can you trade with MACD?

MACD stands for Moving Average Convergence and Divergence. It is a widely used technical indicator. Usually it is used for trend analysis. MACD is calculated using exponential moving averages over the past period. MACD comprises of a "Signal" line and normal line. There are 3 default settings for MACD.

1. Slow moving average - 26 days

2. Fast moving average - 12 days

3. Signal line - 9 day moving average of the difference between fast and slow

Basic Indications of MACD are as below, please note this is a lagging indicator and many times gives false signals.

1. BUY when MACD crosses its signal line from below.

2. SELL when MACD crosses its signal line from above

Please click hereHow to trade with MACD to understand how to trade with MACD