The above shows a BUY signal indicated on 30 July 2009 at 11:30 GMT and a SELL signal indicated on 30 July 2009 at 1830 GMT. The trade alone will net us a +48 pips gain in profit.
Next, we will discussed the advantages and disadvantage of using MACD in trading FOREX. The advantages are,
1. It is simple and esay to understand.
2. The plotting of the MACD curve is readily available in any charting software, where the parameters of the Fast and Slow EMA and the MACD SMA can be changed according to one's need.
3. The BUY and SELL signals are clear cut.
The disadvantages of the MACD are: -
1. To be able to use the MACD to trade, you need to look at the chart the whole day to know when to BUY and to SELL.
2. MACD is a form of lagging indicator. This means that it shows what happens in the past and does not predict the future.
3. MACD has little use in sideways trading (consolidation).
4. It is never used alone, but it should be used in conjunction with other indicators.
But, it is still a tool whereby a lot of traders still use in this present day to help them to understand how the market is going to be moving, and I personally still use it as a guide for me to trade. I don't use it every time, but it is still something that I like.....
No comments:
Post a Comment