Similarities and differences smma, or MACD for short, is a technical analysis tool recently established in the United States. MACD absorbs the advantages of EMA. It is very effective to use the moving average to judge the timing of buying and selling when the trend is obvious, but if there is a cowhide consolidation market, the signal will be frequent and inaccurate. MACD developed according to the principle of moving average overcomes the defect of frequent false signals of moving average and ensures the greatest success of moving average.
Calculation method
MACD is to calculate the smma (moving average) difference of two indexes with different speeds (long-term and medium-term) as the basis for judging the market.
1. First, calculate the short daily indicator smma and the long daily indicator smma of the closing price respectively, and record them as EMA (short) and EMA (long) respectively.
2. Find out the difference between smma of these two indices, namely:
DIFF = EMA (short)-EMA (long)
3. Then calculate the smma of DIFF's daily index, and record it as DEA.
4. Finally, subtract DEA from DIFF to get MACD. MACD is usually plotted as a column chart fluctuating around the zero axis.
DIFF and DEA form two moving average lines, fast and slow, and the trading signal also depends on the intersection of these two lines. Obviously, MACD is a medium-and long-term investment technology tool.
By default, when the short line = 12, the long line =26 and the middle line =9, the system will draw the difference line, DEA line and MACD line (column line).
Application rules
1, DIFF and DEA are both positive values, that is, when they are all above the zero axis, the megatrend belongs to a bull market, and DIFF breaks through DEA upwards and can be bought.
2.DIFF and DEA are both negative numbers, that is, when both are below the zero axis, the general trend is short market, and DIFF can be sold when it falls below DEA.
3. When the trend of DEA line deviates from the trend of K line, it is a reverse signal.
4.DEA has a high error rate in the game, but if it cooperates with RSI and KD, it can make up for the deficiency appropriately.
5. Analyze the MACD column chart. When it changes from positive to negative, it often indicates selling, and vice versa, it is often a buying signal.