The MACD is an oscillator that looks at the difference between two exponential moving averages. When plotting a MACD indicator only two lines show up even though 3 exponential moving averages are used in the indicator's construction. The periods of the 3 moving averages at work by default are set to 12, 26, and 9.
The histogram portion of the MACD indicator shows the difference between the fast and signal lines.
The middle panel is an example of the MACD indicator as it looks in the VT Trader software.
In the bottom panel, a different way to visualize MACD is presented, another indicator called the MACD-Line indicator. The blue fast line is replaced by a histogram and the signal line remains unchanged. The analysis in both panels is the same (for the most part); they simply look different. It is easier to do some analysis like centerline crossovers with the MACD-Line indicator. However, it does not have the histogram part (the divergence) of the regular MACD indicator that shows the difference between the two lines.
ShareThis
The materials presented on this website are solely for informational purposes and are not intended as investment or trading advice. Please refer to our risk disclosure page for more information.
Risk Disclaimer: Online forex trading carries a high degree of risk to your capital and it is possible to lose your entire investment. Only speculate with money you can afford to lose. Forex trading may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary.
Our platform and software is now more powerful than ever. As an introducing broker for Gain Capital, CMS Forex provides customers with exclusive access to VT Trader. With a host of new features, including over 100 new built-in technical trading systems, traders will love the new VT Trader.
