MACD
Two moving averages and a histogram: a view of momentum and trend change.
What it is
MACD is the difference between a 12 and a 26 period EMA, with a 9 period signal line. The histogram shows the gap between MACD and the signal. A cross of MACD above the signal suggests rising momentum; the zero line separates bullish from bearish territory.
Like most indicators it lags. It is best used to confirm trend and momentum rather than to pick tops and bottoms.
How to use it
- Check whether MACD is above or below zero (trend bias).
- Look for crosses in the direction of the trend.
- Watch for a shrinking histogram as an early warning.
- Combine with a level or structure break.
Use it to confirm, not to predict.
Common mistakes
- Trading every cross in a range.
- Ignoring that signals arrive after much of the move.
- Optimising settings until history looks perfect.
Practise it in TradeDesk X
The Chart lower pane offers MACD, RSI and volume. The Scanner includes momentum confluences so you do not need to read the lines by eye.
Related lessons
📊
RSI (relative strength index)
A momentum gauge from 0 to 100. It shows stretched conditions and divergences.
📊Moving averages (SMA and EMA)
Smoothed price. They show trend direction and act as dynamic support and resistance.
Educational content only. Nothing here is financial advice or a recommendation to buy or sell anything. Trading leveraged products can lose more than you deposit. Practise with paper trading first and never risk money you cannot afford to lose.