Binary Options MACD
One of the most popular indicators for technical analysis in the world is MACD which means moving average convergence/divergence.
This amazing instrument was created by Gerald Appel who knows absolutely everything about Forex MACD trading strategy as well as binary options. During his life, Gerald Appel created not only one of the most successful indicators but also became a millionaire due to 15 books he has written after which he was claimed to be a technical analysis expert. Moreover he is an owner of two investment companies that work with stocks, options, investment foundations etc.
Formula
The formula is calculated automatically in a live chart. Indicators of such a class as MACD are always based on moving average. There are two lines in the indicator plus a histogram.
– MACD line: EMA 12 days – EMA 26 candles;
– Signal line: EMA 9 candles;
– Histogram: MACD line – signal line;
General Information
The indicator is pretty simple therefore, it is so popular among traders worldwide. It has only three simple components:
MACD Line – this line is made very quickly. A trader should take a long moving average (EMA) and deduct it from a shorter one EMA. As usual, the long one is equal to 26 days, short one to 12 days. Despite this, nobody can stop you from setting your own figures.
Signal Line – this is EMA from MACD line. Here, you can select the length of a moving average which is usually equal to 9.
Histogram – as the price develops, the distance between MACD and signal line will change. This is what is called histogram. Its main aim is to determine how close and far away these two lines will be from each other. Besides that, histogram can be higher or lower than 0 (basic line). When it is higher – the price increases and on the contrary.
Binary Options MACD Trading
As you can see an indicator is not only simple but also effective. Generally speaking, it is an indicator and a Forex MACD trading strategy at the same time. This feature doesn’t only let determine a trend but also a power the price moves with.
Working with Forex MACD trading strategy is very simple, all you need to do is to look at the crossings and divergences – they always accurately show a trend change. Also don’t forget to look at the currency pair behavior or any other asset in different time-frames and if needed correct the situation and strategy. The most important point in binary options is of course the crossing of the lines and not make a mistake with an expirations.
Resume: Are there any Disadvantages?
Of course, despite all its advantages, MACD has certain minor cons similar to any other indicator. Pin faith in the indicator is not right. None of the indicators guarantees 100% profitable trades. It should always be checked together with price movement direction. You should estimate the situation in general and after that use different time frames, expirations etc.
After a proper practice, MACD demonstrates great results – it is actually what it was created for. Have patience as practice doesn’t like hurrying up and fuss.
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