Making Better Forex Trades By Using A MACD Indicator
When you make a MACD Indicator part of your Forex strategy, you can see much more consistently profitable trading activity; and keep your losses to a minimum.
If you`re not familiar with the term already, MACD stands for Moving Average Convergence Divergence. This can assist you in deciding which trades have the best chance of being profitable for you and which you should trade short on or avoid altogether.
Foreign currency exchange markets move quickly; a trade which can work wonders for you right now may be in a tailspin a mere few hours later.
Like any kind of investment, being successful in Forex trading means using tools which help you predict the movements of the market and well thought out trading strategies which lead to increased profitability. Using a MACD indicator shows you the trends in currency prices in real time as well as showing you longer term trends, so you will be able to decide exactly when the ideal time is to make your trades.
How Do MACD Indicators Work?
The MACD is composed of a few different moving average indicators, each of which is pretty straightforward. One is the signal line (also known as the water line). This shows you the exponential moving average (EMA, for short) drawn from closing prices over the last nine days of trading in the currency market.
The upward or downward trend of a given currency are based on two different EMAs. There is a 12 day EMA as well as a 26 day EMA; taken together, these figures give you a better picture of the movements of this currency.
The MACD line of the currency you`re watching may fall below or above your EMA signal line. The position of this line relative to the MACD line tells you whether the currency is on its way up or down.
Using A MACD Indicator For Forex Trading
Once you learn how to read the charts and come to an understanding of what the MACD`s movements mean you will be able to make better trades more easily. As any experienced Forex trader can tell you, knowing the trends in the foreign currency exchange market makes all the difference. Thanks to the one and four hour charts your MACD indicator will give you, you`ll be able to see the prevailing trends in the market and take advantage of them.
By learning to watch both sets of charts you should be able to pin point which currencies are trending upwards and which are trending down. When both the 4 hour and the 1 hour MACDs are trending up your chances of entering a profitable trade are more likely.
Before placing any trades, you should consult your hourly chart to see how the MACD indicator is moving. If the MACD indicator is above the waterline, then you have better odds of making a profitable trade by going long.
It is important to keep in mind that any investment comes with a degree of risk and there is no one tool or indicator which guarantees a successful trade every time. Using a MACD indicator along with other tools and a solid knowledge of the workings of the Forex market can make your Forex trades more profitable, however. Of course, even if you use the MACD indicator alone to help you make your trading decisions, it will still provide you with more consistently profitable trades than going it alone.
If youre looking for ways to help increase your success rates with your own forex trading strategies, then perhaps using an MACD indicator could be the ideal investment tool for you. - 23199
If you`re not familiar with the term already, MACD stands for Moving Average Convergence Divergence. This can assist you in deciding which trades have the best chance of being profitable for you and which you should trade short on or avoid altogether.
Foreign currency exchange markets move quickly; a trade which can work wonders for you right now may be in a tailspin a mere few hours later.
Like any kind of investment, being successful in Forex trading means using tools which help you predict the movements of the market and well thought out trading strategies which lead to increased profitability. Using a MACD indicator shows you the trends in currency prices in real time as well as showing you longer term trends, so you will be able to decide exactly when the ideal time is to make your trades.
How Do MACD Indicators Work?
The MACD is composed of a few different moving average indicators, each of which is pretty straightforward. One is the signal line (also known as the water line). This shows you the exponential moving average (EMA, for short) drawn from closing prices over the last nine days of trading in the currency market.
The upward or downward trend of a given currency are based on two different EMAs. There is a 12 day EMA as well as a 26 day EMA; taken together, these figures give you a better picture of the movements of this currency.
The MACD line of the currency you`re watching may fall below or above your EMA signal line. The position of this line relative to the MACD line tells you whether the currency is on its way up or down.
Using A MACD Indicator For Forex Trading
Once you learn how to read the charts and come to an understanding of what the MACD`s movements mean you will be able to make better trades more easily. As any experienced Forex trader can tell you, knowing the trends in the foreign currency exchange market makes all the difference. Thanks to the one and four hour charts your MACD indicator will give you, you`ll be able to see the prevailing trends in the market and take advantage of them.
By learning to watch both sets of charts you should be able to pin point which currencies are trending upwards and which are trending down. When both the 4 hour and the 1 hour MACDs are trending up your chances of entering a profitable trade are more likely.
Before placing any trades, you should consult your hourly chart to see how the MACD indicator is moving. If the MACD indicator is above the waterline, then you have better odds of making a profitable trade by going long.
It is important to keep in mind that any investment comes with a degree of risk and there is no one tool or indicator which guarantees a successful trade every time. Using a MACD indicator along with other tools and a solid knowledge of the workings of the Forex market can make your Forex trades more profitable, however. Of course, even if you use the MACD indicator alone to help you make your trading decisions, it will still provide you with more consistently profitable trades than going it alone.
If youre looking for ways to help increase your success rates with your own forex trading strategies, then perhaps using an MACD indicator could be the ideal investment tool for you. - 23199
About the Author:
About the Author: Samo Yanezic is the Webmaster of Financial Freedom Informant.com - Your Free Complete Guide and the Internet`s Rising Source for Online Home Business and Investments Education. See also this About Forex page.
posted by X - Men @ 4:15 AM
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