The basic concept of 1 MACD
MACD indicator consists of two lines, a histogram and a set of moving averages. The difference between the fast line (usually 12 moving average) and the slow line (usually 26 moving average) will appear as MACD line. At the same time, another moving average (usually a 9-day moving average) is calculated to show a signal line, that is, the MACD line is smoothed. Histogram is realized by displaying the difference between MACD line and signal line as a straight line. MACD indicator is widely used to identify the short-term trend of stock price and locate the trading opportunity. When the MACD line passes through the signal line, it is regarded as a buy signal, and when the MACD line passes through the signal line, it is regarded as a sell signal.
2. Correctly understand the types of MACD indicators
Before setting MACD indicators, we must correctly understand two types: shock MACD and trend MACD.
Shock MACD: It frequently appears in the environment of market fluctuation, and is mainly used to identify the short-term fluctuation of stock price and the timing of positioning trading. The key to setting the oscillating MACD is to try to capture the moment when the trend reverses. It can be achieved by raising the short-period moving average and lowering the long-period moving average.
Trend MACD: When the stock market trend moves up or down, it is mainly used to identify the long-term trend of the stock price and determine the trading opportunity. At this time, it is more difficult to try to capture the moment of trend change. The change of MACD can be highlighted by amplifying the difference between short-term moving average and long-term moving average.
3. Choose a different set time length
When choosing different length extremes, we should choose according to the actual market environment and trading strategy. Generally speaking, MACD has a short period of 12 days, a long period of 26 days, and a signal line period of 9 days. However, for faster trading strategies and short-term time frames, we can consider shortening the cycle, and for longer trading strategies and time frames, we can consider lengthening the cycle.
4. Find an accurate MACD value.
MACD is very accurate when the market fluctuates. However, in the trend market, MACD may be relatively inaccurate, so it is suggested to refer to other indicators, such as KDJ, trust, Fibonacci technology and so on. At the same time, it is also necessary to ensure that MACD misjudgment is reduced, such as filtering out some abnormal data points.
5. Filter out MACD signals
In addition to using MACD indicators, many traders also use filters to filter other stock price fluctuation information, thus ensuring more accurate signals. For example, a simple method is to make some other technical analysis according to the signal it sends out.
There are more effective methods to improve MACD indicators, such as relative strength indicators, dynamic trend indicators and volatility indicators. When choosing MACD as the index of technical analysis, we must consider some uncertainties in technical analysis and comprehensively consider the stock market environment and trading strategy.