Posted by bynaryost at Nov 13, 2017
Moving Average & MACD: proven indicators on the binary options market, they are working very good in a case to proper use. Moving averages and MACD oscillator at any settings are delayed, like all other technical indicators. Therefore, their use of small timeframes and turbo options with a duration of no more than 3-5 minutes gives a large number of false signals. An exception to the rules is adaptive strategies, as in the vfxAlert app, where they proved themselves to be an additional tool for confirming automatic signals. The strategy is a classic combination of the trend indicator (moving averages) and the oscillator (MACD).
The intersection of the MACD histogram of the zero level can be regarded as a leading signal, but the final decision to open the position to be taken by at he vfxAlert signal of an Adaptive algorithm and WMA/EMA.
The position opens on the first candle after the crossing of the moving averages, and it must necessarily close above the WMA. MAs have a longer delay than MACD, so if the MACD condition is met at the next candle, this signal can also be considered to open the position
The abbreviation "name" of the indicator stands for - Moving Average Convergence / Divergence. In translation - the convergence/divergence of moving averages, and this is what the trader shows - the degree of divergence of the Moving Average lines. It was developed by Gerald Appel, who before becoming interested in financial trading, was a psychologist by profession and a photographer by vocation. However, perhaps it was the creative approach and knowledge of human psychology that allowed the author to create such a unique oscillator.
The MACD indicator consists of a histogram and three moving averages: exponential MA lines with a period of 12, 26 and 9. Of course, only two sliding lines are visible on the chart, however, the value of the long moving is calculated from the value of the short line with the smoothing of the difference. Why are the lines smoothed out? Thanks to the smoothing of removals, one can see the real direction of the trend, removing all market noise and deceptive manoeuvres of quotations. It is such a simple composition that makes the indicator so popular because not every trader likes archival algorithms with a multilevel mechanism.
On the price chart MACD, like an oscillator is located in the so-called "basement", demonstrating the dynamics and direction of the trend, therefore, applying the oscillator on the chart, you can see the following picture: