Indikator

Macd in Forex

This indicator is developed by Gerald Appel who was a trader and market technical analyst,This is a million dollar question. Before I answer this question that why MACD works, I prefer to explain about one of the most important reasons of forex traders’ (and also all other kind of traders’)failure. Maybe you have heard this a lot from us but it has to be reminded in this article too. Lack of patience is one of the most important reasons of forex traders failure. Most traders are not patient enough to wait for a good trade setup. After several minutes, hours or days that they wait for a signal (depend on the time frame or system they use), and they can not find any signal, they lose their patience and force themselves to take a position while there is no sharp and clear signal. So they lose. On the other hand, when they succeed to take a good position, they get out too early with a small profit because they are afraid of losing the profit they have already made. They do not have enough patience to hold a position until it hits the target. So they make their profit limited because of lack of patience. MACD is a solution for this problem because it is so delayed and this delay forces you to wait more, both when you are waiting for a trade setup or when you already have a position. That’s why MACD is recommended both by forex and stock traders.

MACD Divergence is one of the most famous and strongest trading signals that MACD generates. MACD Divergence forms when the price goes up and makes higher highs and at the same time, MACD bars go down and make lower highs. The rule says, the price will finally follow the MACD direction and will break down. However, the problem is, you never know when the price will follow the MACD direction. So, if you rush and take a short position right when you see a MACD Divergence, it may keep on going up for several more candles. You should go short when MACD Divergence is followed by a good sell signal by the candles and/or a support break down. This is safer.