MACD: What you need to know

Mod's, please either don't allow this sort of content being posted (it's not news) or create another section for this sort of content.

Well it is notified as educational news and several such pieces have been allowed in the past and participants find it useful (judging by the number of views and the heated comments around many such).
This piece is pretty basic and bland but the less experienced trader (newbie) might pick something useful (I am assuming anyone 3 months old in the can would know already what has been put out here).One general advice though to the more experienced trader (and based on my humble experience) is that there is not much usefulness in standard setups such as advocated here (not just for MACD but all the usual suspects when it comes to Os). The key is to deploy them analytically rather than use them as trigger indicators for trading. For one thing nearly all the standard Os (and popular tools like Bollinger Bands) assume the Gaussian distribution. Because this is absolutely incorrect for price there is a case for avoiding the mistake of using these indicators as prescribed here. One way out is to employ indicators that correct the math by using a transfer function to normalize their registers. This is a more pertinent and important point than just "teaching" Os without considering their incredible inaccuracy (terrible whipsaws at critical points and several other significant drawbacks) as tools. The ideals of the makers were never met in practice until now that later technical thinkers have gone into the math to correct things. I think traders using Os should update their knowledge and upgrade to such corrected tools.

The Crow (-_-)

@AussieForexM

Well said, I couldn't agree more. Most of these indicators were developed in the days before we had computerized charting, and as such the formulas employed in them are highly oversimplified in order to make it possible for the math to be solved by hand. Personally, I see indicators as being useful teaching tools for newbies, and as potential ways of timing market entry when you have already located a setup that you want to trade - but they should not be used to identify setups. In fact, looking at a single chart and deciding to trade off of that alone is absolutely silly. The only proper way is to look at the markets and the overall sentiment as a whole. No currency pair exists in isolation - I believe best indicator to predict any currency pair's movement, is another correlated currency pair, or set of pairs.

MACD
Makes your Account go Consistently in Drawdown

LOL

Now this is worth being in the FF news!!! lol!!!

MACD is an interesting indicator in a trending market, which is nowhere to be found nowadays. my personal setting as a fast trader is 10 long, 8, 5 short.