MACD Explained
Moving Average Convergence/Divergence measures the distance between a fast and a slow exponential average. Developed by Gerald Appel in the late 1970s; the histogram was added later.
How it's calculated
MACD line = 12-session EMA − 26-session EMA. Signal line = 9-session EMA of the MACD line. Histogram = MACD line − signal line.
How traders use it
The MACD line crossing above the signal line (histogram turning positive) is read as rising momentum, and crossing below as falling momentum. Crossing zero means the fast average has crossed the slow one.
What people say
Because it's built from averages of averages, it lags: crossovers often arrive after much of the move. In sideways markets it whipsaws. It's most useful for spotting changes in momentum within a trend you've already identified.
Practise with this indicator
Open a real hidden-stock chart with only this indicator turned on and see if it helps you beat the market.
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