
Understand The Power of MACD and Choose The Best Platform
If you are new in trading you need to know everything about prop firms. One of the common things is MACD. It is a powerful indicator in the trading industry. You have heard the name many times. But what is that?
MACD, full meaning is The Moving Average Convergence/Divergence. It is a signal when it crosses above and below which helps traders when to buy and sell. It is a simple but very helpful tool that traders use to spot trends in the market.
Trading platform provides this tool to understand the market range. It is becoming very popular and easy to use, even for beginners. In this article you know all necessary information about it and a trusted prop to work. And here you will find the valuable review of Fintokie
What is MACD
MACD is a popular and helpful tool in trading platforms. With this tool traders can easily find the price trends. It measures the strength of a trend, and decides when to buy or sell. It compares two moving averages of a stock’s price.
MACD helps you understand market trends and momentum without being too complex. It makes it easier to decide when to enter or exit trades, so you don’t have to guess. It works in most markets and gives clear signals, making trading less stressful and more confident.
Gerald Appel created this tool in the 1970s. This amazing indicator helps to make better trading decisions. It’s widely available on trading platforms and helps traders recognize changes in momentum in a simple and effective way.
How the MACD indicator works:
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Crossing above zero
When the MACD line goes above zero, it’s a bullish signal. It means the price is likely to go up. It shows that buyers are in control and momentum is shifting in a positive direction.
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Crossing below zero:
When the MACD line moves below zero, it’s a bearish signal and it means the price is likely to go down. It suggests that sellers are in control and momentum is turning negative. The trend is likely turning down.
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Turning up from below zero:
If the MACD turns upwards after being below zero, it’s a bullish sign which means the price might start to go up. It shows that buying momentum is increasing.
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Turning down from above zero:
If the MACD turns down after being above zero, it’s a bearish sign. That means the price might go down. It shows that selling momentum is increasing, as more sellers are entering the market, which could lead to a downward trend in the price.
The 3 Parts of MACD: How to Calculate
It is used to understand when to buy and sell. When the MACD line crosses the signal it means a good time for trade.
MACD Line
It tells how the prices changes
Fast (12-day) - Slow (26-day)
Signal Line
This line makes the MACD smoother to understand easily.
Look at the MACD Line over 9 days.
Histogram
MACD Line - Signal Line
Does MACD Have Any Limitations?
The MACD is a useful tool, but it has limitations. So, traders need to keep in mind. One major issue is the possibility to provide false signals, especially during sideways or range-bound markets. The MACD might show a reversal even if the price isn’t changing much.
It may happen when the market is moving sideways. To avoid false signals, traders can use other tools like the Average Directional Index (ADX) to confirm. The ADX shows if a strong trend exists. Its reading above 25 means there is a trend and below 20 means no clear trend.
For example, if the MACD gives you a bearish signal, the ADX can help confirm the trend is really changing. It helps traders avoid making wrong decisions based on incorrect signals. If the ADX shows a strong uptrend traders can ignore the bearish MACD signal.
However, If the ADX result is below 25 and shows a reversal, the bearish signal from the MACD might be more reliable. It means there is no strong trend in the market, so the MACD signal can be trusted more. Using the MACD with tools like the ADX helps traders avoid false signals and make better choices.
Which Platform is The Best for MACD
You will find this MACD on many platforms, but if you’re trading with the Fintokie prop firm, we will highly recommend that company. If you are a beginner at trading, you need a platform that is most supportive. For this reason, we would recommend Fintokie. It is a trusted responsive result and a supportive team is also very helpful.
Mastering tools like MACD can make a big difference. It is a simple and powerful indicator that helps traders spot trends, measure momentum, and decide when to buy or sell. With Fintokie’s fantastic platform, you can use tools like the MACD to improve your trading decisions without risking your own money.
The firm provides access to various markets and the resources you need to refine your skills. Whether you’re new or experienced, Fintokie and the MACD can help you make smarter trades and achieve better results. Coupon Terra also has a Fintokie discount offer.
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In summary, we will say that MACD is a helpful tool that shows trends, momentum, and when to buy or sell. It is very easy to use. However, it can sometimes give false signals, especially when the market is moving sideways.
To avoid mistakes, traders can use other tools like the ADX to confirm if there’s a strong trend. Fintokie is a supportive platform that provides helpful tools. And you will also find more discounts on Fintokie when you are ready to start trading. So, don't be late.
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