The Best Times to Use the MACD Indicator

This week, by popular demand, David decided to cover the Moving Average Convergence Divergence indicator, more commonly known as MACD. It's one of the oscillators that are quite popular with traders and being a combination of several variables, it's considered as a more precise tool than many others.
David takes us through the theory behind it and the way it's calculated before showing us several textbook examples that illustrate it in close to perfect conditions. As usual he then goes on to an example on a real chart that frequently poses different challenges that traders need to understand and overcome in order to find the exact moment when they should open and close a trade.
Let us know in the comments if you liked the video and also if you have any questions about the MACD. Tell us what you want to see next.
At Trading 212 we provide an execution only service. This video should not be construed as investment advice. Investments can fall and rise. Capital at risk. CFDs are higher risk because of leverage.

[@madilm35]

the best ever short video i had ever seen about MACD..thought and explained in a perfect way.

[@MatthewTaylorAu]

just my summary notes. :) blue line = MACD = 26 period moving average - 12 period moving average. green line = 9 day moving average of MACD histogram = vertical difference between MACD and 9 day moving average. when histogram is positive = buy signal, negative histogram= sell signal.

[@maxchen11]

I think it would be DIF - MACD,so it should be 12 period moving average - 26 period moving average.

[@Hin69Hin]

thanks

[@pykalglobal7600]

To confirm. When you say 9-day moving avg, you actually mean 9 period? I.e. if chart is set to hourly, then this data will be 9hrs and not 9 days?

[@user-wy6pb8ek1d]

@@pykalglobal7600 9 period means 9 candles

[@GComas-jn2yc]

Your teaching is crystal clear! 2 thumbs way, way up!

[@christaylor8221]

thats a really nice tool, aspecially using it on less random indixies like dji or normal stocks in high volatile phases like now..

[@thapelogontshitile8321]

The most useful video I have seen by far

[@aGr3atD4y]

THANKS! this was really well made!

[@claybourneangus4418]

Great content, about to check out some more of your videos!

[@needbycars]

Your explanation was simple and straightforward, and it helped me so much

[@muhammadrezagholami3650]

Thank you, to me it was one of the best videos about MACD. I love Davids' videos by the way. Could you do one on "using MACD with RSI" or MACD with whatever it is commonly combined.

[@twozzleweb]

"how it might" - such sound advice. No over promising and over estimating. Also very refreshing to hear about tactics you don't normally consider either.

[@denisageev3437]

Great video, great lesson. Short and goes in depth just enough to understand. Thank you!

[@jesuspalaciostrading16]

David, well explained. I do use Macd to support my technical analysis. Thanks for sharing.

[@Trading212]

You are welcome, Jesus. New videos are published every week - make sure not to miss them.

[@davidjones2452]

Hi - when you change to a 5 day chart, is the time interval flipping to e.g. hourly or 30 minute? This would change the MACD signals if you were previously looking at a daily interval chart.

[@ilovecod64]

Could you guys go over the Detrended Price Oscillator?

[@Trading212]

Thanks for sharing your suggestion, Stavros. It was gathered as feedback.

[@buzzevermore9309]

After that explanation, I'm going to have to subscribe.

[@JoaoNeto-ij1ih]

As always, very useful! Thank you for your content.

[@vipinradhe]

Many thanks David for clearing the concept.

[@pradprad4321]

Very nicely explained. One of the best explanation on youtube so far

[@joenomad3388]

Love your vids David, very simple, concise, beautiful explained and short resulting in sweet results for us. Thanks 🙏🏽

[@DarronSmithBahamianMillionaire]

You explained that really clearly and I have it now! Thanks!

[@jasonefthim5702]

Thank you so much. I can't tell you how much this just all made sense compared to all of the other explanations that made no sense. New subscriber. Rsi video was awesome too. Big help. Thank you

[@fauzifikri7805]

Finally!! After a tons of nonsense explanation videos along the the week, Thanks!

[@tanakaangel6964]

You really make this look easy but I really love the way you explain things

[@this_is_shubh]

Thanks for explaining so beautifully..

[@gezmonder]

I've been backtesting MACD recently and on the daily it seems particularly reliable. Certainly not catching bottoms and tops but for an amateur to take every buy and sell signal the probability of winning over time is very good.

[@jesper9622]

what other indicators do you use?

[@haroldpogoy2809]

hello there professional trader, if this indicator is suitable for amateurs then what other techniques would you use?

[@bhaldurgumbo1256]

@@jesper9622 it pairs well with the RSI

[@Ronalexandernyc]

Exactly what I was looking for. Thanks

[@ahmedmagdyfarid]

Brilliant and easy to follow! Thanks ;)

[@NoSuffix]

Clear video & pleasant sound. Thanks!

[@raynorheydenrych203]

Thank you. You explained the MACD very clearly

[@winstonthomas4576]

MACD is amazing. It’s my favorite tool in addition to the Bollingers. I never lose with those tools. Plus I’m not greedy. I guess it’s also good for me because I’m really a scalper.

[@TerryJulianLive]

never lose?? lol ok

[@aron7973]

Hey Winston, I know you posted this comment 3 months ago, but I'm a new trader and I'd like to get some advice on scalping. I've only been using the RSI and and 5-day SMA. I've had some success, but other times I've lost big. How do you use your indicators?

[@harveylgordonusa]

@@aron7973 If you are "losing big", may I suggest the issue is not this indicator or that indicator. Look to your emotions, i.e. not taking stops, over trading, over sizing, etc. -best trading, -hg

[@blackspiders741]

Thank you, I was already checking these lines, but only use the 0 line in the center. Did not knew about these crossovers.

[@freddyfrenzy6755]

thank you i really needed this video and its already been a great help in understanding data analysis

[@godwinekhoragbon3592]

Love your videos, always very helpful with the fundamentals

[@SJSMchick]

Thanks for this! I use 5-35-5 for a 2 min chart as it's more sensitive.

[@roshanv619]

Sir your Videos are very good with full of information. Thanks

[@Motivatemovement]

Great information, wish i had seen this video when i first started. Great insight, golden info. keep it up

[@traversethevoid3437]

Thank you for the explanation. It really is simple to understand.

[@igorkovalevski6543]

Excellent explanation! thank you very much!

[@johnnowakowski4062]

Price action is the only leading indicator. "Indicators" are a good tool for confirmation of what you see in price as a function of momentum...

[@matteofabrizio409]

Most indicators are too prone to whipsaws. More useful for swing trading than day trading i'd say.

[@fractalflowpro]

Indicators aren't supposed to work on non-stationary time series

[@missionpupa]

That was a good straightforward explanation. thanks

[@gicelyresplandes]

Very clear and concise explanation!Thanks

[@VikasThakur1_]

Thanks a lot, well explained.

[@MrHaikal02]

Thank you for your tutorials. :)

[@daviddutymentor]

Nice video. Did you notice the last three histograms before it crossed the zero line, had equal or lower highs? This divergence can be used as a "hint" that the rally was not as strong as it looked. I use this quite a lot in my own trading.

[@aeronrogano4992]

Thank you for this tutorial!

[@MFXCenter786]

Excellent video on MACD indicator. Thanks a lot i am going to apply it now.

[@dpatel2304]

good stuff david. thank you.

[@Eirocina]

wow thank for explaining this. im beginning trader and this help out a lot along with ema, vwap,rsi,macd

[@anirbanghose326]

this was such an informative video, you made this so easy to understand

[@timwalter6795]

Great video. Really appreciate your teaching style

[@sn350yt]

Got yourself a subscriber!

[@jorgecamara1030]

Great video thank you men & your honesty Keep up with the good stuff.

[@markzamora304]

thank you this is very informative. I would just like to ask if i am buying at the macd crossover may I know where I can set my stoploss? do you have any suggestions?

[@diegocastro9724]

Man I am on a binge streak watching all your videos

[@dynotrading]

Great Video Thanks for posting

[@reynaldohidalgo1752]

Thanks explained well!

[@drterrenceyap]

Love your tutorials...thanks

[@stevenson720]

Excellent and clear. Thank you.

[@jackye611]

Great explaining vid, keep the great work up ;)

[@joshmccloud32]

Thanks. Makes a lot more sense than textbook.

[@WeVape2019]

That is amazing and clear. Could you calrify if we can use the momentum and divergence in MACD to start getting ready for our next trade. Thanks in advance

[@williampinto5672]

Very well explained in the shortest manner.

[@intiranmailvaganam681]

Excellent explanation thank you so much !!!!!!!

[@marcojimenez4973]

Thank You Very Much your are the only reason this made sense to me. I pray for good fortune for you sir 🤙🏽🤙🏽🤙🏽

[@judyjustado7038]

Macd really works for me... Been using this tool for my trading and i'm happy with my results now compared before. :)

[@TheAnalystradioprogram]

Yes I agree Judy. I noticed a significant, marked increase in my number of winning trades.

[@americanmambi]

Thanks a lot David!!!

[@michaelkeller3896]

Thanks a ton for this great video!!! :D

[@JoeDAngelo4u]

Thank You David, as it looks you need multiple indicators. I am looking forward to more lessions.

[@MrAlanKendall]

When the stock is in a trading range, the slow stochastic and bollinger bands work great! The question is when is the stock in a sideways trading range? As a filter, if the MONTHLY macd is positive and the WEEKLY macd is positive, I just hold the stock, it is trending UP and NOT in a trading range. If the MONTHLY MACD is negative and the macd is negative, the stock is trending DOWN and I short it. When the MONTHLY MACD and WEEKLY MACD are not in the same direction, the stock is NOT trending but pausing, so I use the Bollinger Bands and Slow Stochastic to trend the sideways consolidations. If the stock or mutual fund in moving very slow, both the Weekly and Monthly MACD give too many signals and this is the big flaw with the MACD, when the bollinger works best, the MACD does not work at all. Just avoid slow moving stocks, and use this MACD filter on stocks that are moving. A long term trend line or long term support and resistance also work well with bollinger bands to find support or resistance levels.

[@mattdathew2794]

Thanks a lot, this is actually my 2nd time watching the video

[@Shengmea]

Thank you, this helps

[@lakshansamarasinghe2439]

Thank you and very helpful for me as a beginner!

[@MrStrange1984]

Im very new to trading but i get the impression that using ichimoku together with rsi and macd might make trading easier for me in the future, much easier to spot good entrylevels and when to bail out of them. Any other point of view from a more experienced trader would be much appreciated. Great video btw! Thanks

[@DonnellBridges]

Great Video, Explained Perfectly as I am a beginner trader. Thank You.

[@VOVGIRL]

Excellent Job , explaining this Thank You 👍🏾😊

[@raphaelcharlespinon]

Had to watch the video twice, but I got it the second time. The downward cross indicates a sell signal and the upward cross a buy signal. For a noob like me, this was a very easy to understand video. Will look through some of your older (and newer) videos. Now a subscriber. Keep up the good work!

[@fandydiadline]

I really like your explanations

[@singmengyeong]

Thanks for the explanation..may I know this macd signal suit h4 chart well?

[@phillyrcreese4067]

Great vid Tx man!!!

[@johnbobbypringle]

This video made no sense to me last week when I watched it, but now I understood everything

[@salimalothman7508]

thanks excellent explanation ,,,,, many thanks

[@godis6516]

i learned someting new from this video, thnx alot

[@xxxrichboiofficial6226]

Thank you I finally know how to use it😊😎

[@nsuri691]

well explained !!

[@petebrasch8689]

Hi David, Great video thank you Pete

[@utancazaminje7614]

cheers mate, 212 stuff is most helpfull

[@dacallins0884]

wow really great explanation. so many others make this complicated.

[@BoomHales]

Thank you so much !

[@jttx2046]

best investing videos on youtube thank you.

[@veereshkallubandemat6674]

im new to trading, this is very usefull to me, thank you sir

[@karenjackson544]

I have a question, so I’ve been using the MACD and 200 MA as my indicators for trading. However, I’ve been noticing that the two have been conflicting. Like one showing an uptrend vs one indicator showing a downtrend. Which one am I looking at or following in order to enter scalp trade?

[@ofir7771]

I like this video you made. It is exp;ained very well plus the example made it very clear. I'm wondering if you have a video where you explain how to analize a stock's funcdemental. How do I know if the price is blown up or it's a good deal? Thanks for the great content

[@mohamadrezasalami8522]

thanks . needed that

[@nguyetnguyen8692]

It's a very useful video. Can you also show us how to trade with different time frames? How to look at the indicators and interpret it correctly? For example, the MACD in Day, in 4Hour, 1Hour.. there are the differences in the way the indicator shows. How can I interpret it correctly to have a good trading strategy?

[@stevecatron9607]

Great video:)

[@hernstv]

Well explained.

[@unrhu]

You just got yourself a sub. Great stuff thank you sir!

[@joshuastirk4997]

Thanks David, you've added so much value to my trading strategy. I feel a major breakthrough this coming week after going over my current one; after watching many of your videos.. I have yet to put any real capital down, want to fine-tune it first before I go ahead and start trading (Which is the wise thing of course) I have $5000 ready to go, and really don't feel like losing anything :p. Look forward to seeing more of your content! Keep up the awesome work!

[@mikebasketball11]

How are you trading there Joshua? Would love to know - I'm new to trading myself. Hope you've been killing it! Would love to know why if not :) All the best.

[@celebritygistsample396]

Hope you didn't lose your $5000?

[@obqwgdu]

Thanks David, I would like to automatically back-test the MACD strategy.... is there any tool that could help me with that? Thanks

[@christopherasalvo6150]

an excellent presentation

[@timetorelaxfocus9642]

Informative, thanks

[@PS-sw7iv]

You're a very good Instructor 🍻