MACD is very useful, and I believe many investors would agree with this point. Those who don’t agree are mostly those who only know part of it and not the whole picture, which indicates you haven’t fully understood how to use MACD. So, you need to patiently read through this article.
First, let’s briefly introduce MACD. MACD stands for the Exponential Moving Average Convergence Divergence, and for short to medium-term traders, MACD is an excellent trend indicator. It can tell you the mid-term trend of the stock. As everyone knows, when MACD turns from negative to positive, it is a buy signal. When MACD turns from positive to negative, it is a sell signal. When MACD changes at a large angle, it means that the gap between the fast and slow moving averages is quickly widening, indicating a major shift in the market trend. However, this is just a basic idea. Typically, institutional investors will use these basic indicators to create false buy/sell signals to deceive retail investors and take their cash or shares.