However, it does have some special features in the sense that it can be used like a trend indicator as well and I will explain here what this means. When it is used like an oscillator, traders are looking for divergences between price and MACD in the same fashion like when trading divergences with the RSI Relative Strength Index. You can find more about trading divergences with the RSI right here in our Forex Trading Academy section.

A divergence in a classical way means that price is moving in an opposite direction when compared with the oscillator and traders are always focusing on the oscillator rather than on price for the simple reason that the oscillator takes a bigger period into consideration. The bigger the period the oscillator considers, the more powerful the divergence is and more valuable the strategy is as well.

As a concrete example how to use this principle in trading binary options, one should look for price, in a bullish trend, to make two new highs, and in the same time the oscillator, in our case the MACD is failing to make the second high.

This means the oscillator is diverging from price and it is being said that market is in a bearish divergence. A bearish stance means we should look to buy put options. The opposite is true as well as if market is in a bearish trend and makes a series of two different and distinct lows but the MACD is not confirming the second low, it is said that market is forming a bullish divergence and call options should be traded.

A divergence can be easily spotted by taking a simple trend line and connect the two highs or lows price is making. In the bullish case, the trend line will rise, in the second case, the trend line will fall. On the oscillator part, it is exactly the opposite: the trend line will fall in the first case, and rise in the second.

Like mentioned at the start of this article, MACD can be used as a trend indicator as well even though it is being plotted below the actual chart in a separate window. The way to do that is to stay on the short side or look to buy put option as long as the MACD lines are falling as this means the bearish trend is here to stay.

The opposite is true as well and as long as the MACD candles are rising we should look to buy call options as it is implying the bullish trend is still intact and buyers will try to jump in every time market is dipping. The expiration date to be used should be strongly correlated with the time frame the oscillator is being applied as this means it is pointless to trade end of month expiration date based on a five minutes chart. Another way to use for continuation trends when analyzing markets with the MACD is to set the zero level to be seen on the oscillator.

By the time market is breaking the zero level from the downside to the upside, buy call options as a continuation pattern with the expiration date to be set according to the time frame the oscillator is plotted on. The opposite is true as well put options should be traded on any more below zero market makes for the first time the zero level is broken. The video recordings that are coming with this article shows you where to find the MACD indicator, how to plot it on a chart and how to apply the three strategies discussed here.

It is easy to identify a divergence by taking the simple trend line and connecting the two lows or highs that the asset price is making. In a bullish situation, there will be a rise in the trend line, whereas in a bearish situation, there will be a fall in the trend line.

With the MACD as an oscillator, the opposite will hold true. The trend line will fall in the case of a bullish market whereas in a bearish market it will rise. Although the MACD is plotted below the chart, it can also be used as a trend indicator.

If the MACD lines are falling, this means a bearish trend will continue and therefore a trader should purchase put options, however if the MACD lines are rising, the bullish trend will remain and call options should be bought, however it is important to correlate the expiry date with the time frame on which the oscillator is applied.

When using the MACD to analyse the markets for continuation trends the zero level can be set on the oscillator. When the market breaks from the downside to the upside of the zero level, a trader should purchase call options, setting the expiry date based on the time frame on which the oscillator is plotted.

The opposite also holds true in that put options can be trade on any move that the market makes below zero on the first time that the zero level is broken.

Optimize Your Binary Options Strategy With The MACD Indicator. What is the MACD Indicator? Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience. Information on this website is provided strictly for informational and educational purposes only and is not intended as a trading recommendation service.

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This is because it is very easy to identify and simple to understand, which makes binary options trading appear to be easy, although it is not. Many traders combine the use of the MACD with other indicators to form a very powerful trading system.

The MACD indicator is formed from a slow and a fast Exponential Moving Average EMA and a Simple Moving Average SMA. It can be interpreted based on the zero level with sub zero levels meaning that the market is bearish and therefore put options are indicated, and levels above zero representing a bullish market with call options being indicated. The MACD is actually an oscillator, and like all oscillators, it shows oversold and overbought levels, yet is also has a few special features as it is able to be used as a trend indicator too.

When the MACD indicator is used as an oscillator, a trader looks for a divergence between the MACD and the asset price in the same way as when trading a divergence with the Relative Strength Index. A classic divergence indicates that the asset price is moving in the opposite direction to the oscillator, and a trader usually focuses on the oscillator instead of the price as the oscillator will take a larger period into consideration.

The larger the period being considered by the oscillator, the divergence becomes more powerful and this makes the strategy ever more valuable. To make use of this when binary options trading, a trader should look in a bullish trend for the price to make 2 new highs while the MACD oscillator fails to make a second high. This shows that the price and oscillator are diverging and therefore the market is showing a bearish divergence with put options being indicated. In the case of a bearish trend when the market makes a series of two distinct yet different lows yet the MACD does not confirm the 2nd low, the market is showing a bullish divergence and therefore the trader should place call options.

It is easy to identify a divergence by taking the simple trend line and connecting the two lows or highs that the asset price is making. In a bullish situation, there will be a rise in the trend line, whereas in a bearish situation, there will be a fall in the trend line.

With the MACD as an oscillator, the opposite will hold true. The trend line will fall in the case of a bullish market whereas in a bearish market it will rise.

Although the MACD is plotted below the chart, it can also be used as a trend indicator. If the MACD lines are falling, this means a bearish trend will continue and therefore a trader should purchase put options, however if the MACD lines are rising, the bullish trend will remain and call options should be bought, however it is important to correlate the expiry date with the time frame on which the oscillator is applied. When using the MACD to analyse the markets for continuation trends the zero level can be set on the oscillator.

When the market breaks from the downside to the upside of the zero level, a trader should purchase call options, setting the expiry date based on the time frame on which the oscillator is plotted. The opposite also holds true in that put options can be trade on any move that the market makes below zero on the first time that the zero level is broken.

Optimize Your Binary Options Strategy With The MACD Indicator. What is the MACD Indicator? How to Use the MACD Indicator When the MACD indicator is used as an oscillator, a trader looks for a divergence between the MACD and the asset price in the same way as when trading a divergence with the Relative Strength Index. How to Interpret the MACD Indicator With the MACD as an oscillator, the opposite will hold true. Other educational articles Trading Double Combinations, One of the Most Complex Corrective Waves Trading The Apex Of A Triangle For Profitable Binary Options Trading Reversal Patterns Triangles Trading Strategy What is the Dark Cover Candlestick Pattern?

Bodas-Sagi, Francisco J. Soltero, and J. Ignacio Hidalgo. In Proceedings of the 10th annual conference companion on Genetic and evolutionary computation, pp. ACM, In International Conference on Business Informatics Research, pp. Springer Berlin Heidelberg, Dev Ops.

A positive MACD value indicates upward price trend while a negative MACD value indicates a downward price trend. In accordance with FTC guidelines, FairForexBrokers. Furthermore, you must look for ways to succeed in the limitations. Personal data may be processed e. com is not licensed nor authorised to provide advice on investing and related matters. Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience. Whereas, Moving Average Convergence Divergence shows the connection between two EMA.

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