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MACD Trend Following Strategy PDF

MACD and Moving Average Strategy

Since the MACD indices indicator uses 26 and 12 EMA to draw the MACD indicator lines, we shall compare these two EMAs with the MACD indices trend following indicator to determine how these buy and sell indices signals are generated and how the MACD indicator can be used to generate trend following signals.

MACD Indices Trading Strategy Guides PDF

MACD Stock Indexes Indicator - MACD Trend Following Trading Strategies - MACD Indices Indicator Strategy - MACD and Moving Average Strategy



The MACD indices indicator is a trend following indicator meaning it generates indices trading signals that are leading compared to lagging indicators that lag behind the indices price.


Buy Indices Trade

A buy indices trade is generated when there is a MACD fast line crosses above the signal line - this shows that there is an upward stock indexes trend. However, as with any leading indices indicator these stock indices signals are prone to whipsaws/ fake out signals.


To eliminate the indices whipsaws it is good to wait for confirmation indices trading signals of the buy indices signals. The confirmation indices signal is when the two MACD indicator lines cross above the zero line mark, when this happens the buy stock indices signal generated is a reliable indices signal.


In the stock indexes trading example explained and illustrated below, the Moving average stock indices indicator generated a buy indices signal, before the stock indexes price started to move up. But it wasn 't until the MACD indices indicator moved above the zero line that the buy indices signal was confirmed, and the Moving Averages also gave an upward crossover indices signal. From experience it's always good to buy after both the MACD indicator lines move above zero center line mark - which shows there is an upward stock indexes trend.

MACD Indices Trading Strategy Guides PDF

Where to Buy using MACD Stock Indexes Indicator - Buy Indices Trading Signal - MACD and Moving Average Indices Trading Strategy



Sell Indices Trade

A sell stock indices signal is generated when there is a MACD fast line crosses below the signal line. However, just like the buy indices signal, these are also prone to whipsaws/ fake outs.


To eliminate the whipsaws it's good to wait for confirmation of the sell indices signal. The confirmation is when the two lines cross below the zero mark, when this happens the sell generated is a reliable indices signal.


In the stock indexes trading example explained and illustrated below, the Moving average generated a sell confirmed after MACD moved below the zero line at the same time that the Moving Averages gave a crossover indices signal.

MACD Indices Trend Following Strategies

Where to Sell - MACD and Moving Average Indices Strategy - Using MACD Stock Indexes Indicator - Sell Indices Trading Signal

 

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