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**Indicator Moving Average Convergence Divergence (MACD**

MACD is a definition of momentum-indicators following trends, which means that it is suitable for use by beginners because it can be made into the center of some simple - binary options trading system - but still efficient. In the case of MACD, the key word is EMA (Exponential Moving Indicator), which is used to calculate the MACD itself as well as the signal line used in combination with MACD to generate trading signals. MACD is calculated by subtracting 26 EMA days from the first 12 days. The signal line will be 9 days EMA.There are three ways to get trading signals out of the MACD path and the words above the signal line relate to each other.

The first way is to look for two to cross. If MACD crosses below the signal line, there is a developing bearish tendency. If on the other hand, MACD crosses above the signal line, the signal is a bullish one.

Divergence is the second way to get "read" out of MACD. When and asset prices show divergence, it is taken as a signal that the current trend is to end (and experience a reversal, obviously).

Last but not least, we have a situation when the MACD rises sharply, which is an indication that the asset is in an overbought position, which will be corrected soon. Considering that the increase in MACD can be translated as the term shorter-moving average withdraws from the long-term, the conclusion above is a logical one indeed. In accordance with what trains the mind: whether MACD is above or below zero also carries meaning. If it's above zero, it's clear that the short-term moving average is above the long-term one and that means a bullish view. If it is below zero, we are dealing with a bearish outlook.

As said above, MACD is great for spotting trend reversals as part of various trend-following strategies, and because of simplicity, it fits well for beginner strategies.

**Stochastic Oscillator**

Like the MACD, the stochastic oscillator is a momentum-based indicator, which is also intended to predict reversal trends in asset prices, by comparing current asset prices with the range that prices have covered a number of previous trading sessions. Stochastic oscillators can actually be expressed through a mathematical formula:% K (which is our oscillator) = [(current asset price-L14) / (H14-L14)] * 100. In this formula, H14 is the highest asset-price level reaching more than Last 14 days, while L14 is the lowest price. With that out of the way, it is clear how the stochastic oscillator works and sets what to achieve. As in the case of MACD, where we need a signal line also to get our trading signal, with a stochastic oscillator, we use% D, which is basically a 3-day moving average of% K. All of the above is taken into account, it is clear what The stochastic oscillator is done to show us consistency with which asset prices close near highs and lows of the last few days'. In the case of a bullish trend, asset-prices tend to close near highs, while in the case of a bearish trend, close near lows more consistently.

As a range-bound variable, the stochastic oscillator is great for identifying overbought and oversold situations, and for that, can offer trading instructions by itself: if above 70, we tend to have overbought situations in our hands. Below 20, asset-prices are oversold and thus, trend-reversal is likely in both cases. Unfortunately, because fake voices often produce,% K alone is not a reliable source of trading signals. With the addition of% D though, we will be able to determine the shift in momentum (as two cross indicators) and added to the overbought oversold identified by% K as stated above, we do get more reliable trading instructions.

Another way that the stochastic oscillator will serve up the trading signal is when it shows the difference with the asset price action. Such divergence is considered a sign of future trends.

While the stochastic oscillator is a great tool in and of itself, it is best to use it as a free tool for different types of strategies. If we get a trade that signals off the pin-bar for example, we can use the stochastic oscillator to have it confirmed / valid.

Use a robot trader to completely remove the human / emotional factor from your trading. Parabolic SAR is very suitable for mechanical trading as it is.

**Parabolic SAR**

For market trends, Parabolic SAR (Stop and Reversal) is one of the most powerful and easy to use tools, which aims to build asset-price momentum and find a point where possible reversals are higher than normal. The drawback associated with the Parabolic SAR is the fact that it generates a lot of false signals during the asset price consolidation period, so much so that in reality it is not very suitable for use in situations like this.

On the chart, Parabolic SAR takes the form of a series of dots placed above or below the actual asset price. If we have a bullish trend and SAR points are below asset prices, we get a bullish signal, which basically says that the bullish trend will continue. The point appearing above the asset price chart shows a bearish trend. A sell signal generated immediately after the SAR dot first appears at the top of the price-action candlestick at the end of the bullish trend.

Being a fully mechanical indicator capable of responding to changing conditions, Parabolic SAR is not only a very popular tool among those preparing their own trading systems around it, it's probably the most efficient way to set one's stop-loss orders and thusly a great way to lock paper profits in market trends.

Like all other indicators presented above, SAR is the best when used in combination with other indicators. For example, the reversal signal generated by this indicator is far more valuable when it comes as prices are below the long-term moving average rather than the opposite.

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