How to Use Forex MACD Indicator

The forex MACD indicator is a tool that is developed by Gerald Appel. Personally I find this indicator very useful as it has multiple features that can help to better enhance a trade and best of all, it is very reliable.

Below are what you can do with your MACD indicator

1) Identify a trend: The MACD can be used to help you identify the current trend of the market. From the position of the MACD line, you will be able to tell whether the market is currently in an uptrend or in a downtrend.

2) Identify a reversal: Besides using the MACD indicator to tell the trend, you can also make use of it to help you identify a reverse in trend. This can be done by reading the histogram of the MACD. Depending on the position of the histogram, the length of it can be use to interpret whether the buyer is stronger or seller is stronger at any particular moment. In addition, the occurrence of divergence in MACD also helps to signal an incoming reversal.

3) Confirm a breakout: There are a lot of false signal in the market and this is also the main reason why most new traders lost their money within their first few months of trading. The best way to reduce the chance of losing money due to false signal is to make use of the MACD indicator. You can used the MACD and its trigger line to validate or invalidate a trend line break or a breakout and this can save you a lot of money.

From the above, you can see what the MACD indicator can do for you. So spend sometime to play with this indicator and get use to it before integrating it into your trading plan.