Trade The MACD

The MACD, or the Moving Average Convergence Divergence, is probably the most popular technical indicator. Almost every trader has traded the MACD at the beginning of his trading career, and some even continue to use it later on. In this article we will describe the origins of the MACD, its calculation and the markets it functions well.


Calculation
The MACD is calculated with 3 EMAs: 12-days EMA, 26-days EMA and 9-days EMA. The main MACD value is calculated by subtracting the 26-days EMA from the 12-days EMA. A 9-days EMA is then calculated on the MACD, to produce a signal line.
Main MACD = EMA[12] – EMA[26]
Signal MACD = EMA[9] of MACD