Clouds. 68   F New York
AI-Powered News Summarizer
Cryptocurrency

Here’s 5 ways investors can use the MACD indicator to make better trades

June 11, 2021. Summarized by summa-bot.

Compression ratio: 17.5%. 1 min read.

Traders use the MACD indicator to identify turning points, facilitate entries on pullbacks and capture the larger part of a move until the trend starts to reverse course.

The Moving Average Convergence Divergence, also called the MACD, is a trend-following momentum indicator used widely by traders.

A signal line, which is the exponential moving average of the MACD completes the indicator.

However, for the subsequent examples, let’s use one MACD with the 19- to 39-day combination which is less sensitive and will be used for generating sell signals.

The second one will be more sensitive, using the 6- to 19-day MACD combination which will be used for buy signals.

In October, as the BTC/USDT pair started an uptrend, the MACD gave a buy signal when the indicator crossed above the centerline in mid-October of 2020.

After entering the trade, watch how the MACD came close to the signal line on four occasions (marked as ellipses on the chart) on the sensitive 6- to 19-day MACD combination.

This could have made it easier for the trader to stay in the trade till the MACD dropped below the signal line on Nov. 26, 2020, triggering a sell signal.

Comparatively, the less sensitive MACD remained above the signal line until Aug. 12, 2020, capturing a larger portion of the trend.

Traders can also use a combination of a less sensitive and more sensitive MACD indicator for better results.

by summa-bot

Summarizer is now on Google News and Telegram. Now you can get the latest AI summarized news on your favorite platform.

Don't like these above? We have an RSS Feed for you.

Suggestions