The Best Way to Trade With MACD Indicator

The MACD indicator is one of my favourite indicators among so many different indicators and it has never been omitted from any one of my trading strategies.

Unlike other indicators, the MACD can be used for more than one way and it is very versatile. There are 3 ways you can make use of this indicator but in this article, I will be talking about the best way you can trade with MACD.

The divergence of MACD is one of the most reliable trading signals that you can get from your chart. There are 2 main types of divergence namely positive and negative divergence.

1) Positive Divergence: This is formed when the market makes lower lows while the MACD indicator makes higher lows. This is an indication that the market is going to reverse from a downtrend to an uptrend. The divergence is a leading indicator as it is usually signaling to you that the market is reaching its reversal point. However, you should not think that it will reverse immediately. Some reversal happen sometime after the divergence is formed.

2) Negative Divergence: To form the negative divergence, the market will need to make higher highs while the MACD makes lower highs. This is an indication that the market is reversing its direction from up to down.

The best way to trade the MACD divergence will be to make use of a trend line, you should only enter your trade when the price breached the trend line in the direction of the divergence.