Macd Indicator for beginners

 Macd Indicator basically stands for Moving Average Convergence and divergence. Macd is invented by Gerald Appel in 1979. Macd is very popular and important indicator. Macd is leading indicator because it shows the signal before the trend is changed.

Macd indicator is trend following indicator like Moving Average and Supertrend. it is very precise and accurate in trending stock market. it is combination of two different Exponential Moving Average. 

There are four Different Components Which are following.

 • First is Macd Line which is also called fast line. it's Green Line. Macd line is difference of (12 day EMA - 26 day EMA).

 • Second is Signal Line which is also called slow line. it's Red Line. Signal line is 9 day EMA of Macd Line.

 • Third is Zero Line which is also called Base Line or Centre Line.

 • Fourt is Histogram which are bars up and down of  the Zero Line. Histogram is the difference of Macd Line and Signal Line.

 • Macd default settings are 12, 26,9 and this the best setting of Macd Indicator.

How does Macd Indicator Works ?

In Macd indicator there are two lines Macd line and Signal line which are moving together around the Base line. when there is an crossover happens, it giving us the buying and selling signal. 

There are two crossovers

 • First is positive crossover or bullish crossover. When Macd line is cross the Signal line from bottom to top, then it is called the positive crossover and we receive the buying signal. Until the Macd line is upon the Signal line, the Stock market is in the bullish trend.

 • Second is negative crossover or bearish crossover. When Macd line is cross the Signal line from top to bottom, then it is called the negative crossover and we receive the selling signal. Until the Macd line is below the Signal line, the Stock market is in the bearish trend.

Until the both lines crossover in opposite directions, there is no signal of trend reversal. There is very important role of zero line alongwith the positive crossover and negative crossover.

 • When the positive crossover happen upon the Zero line or below the Zero line ( until the both lines comes up the Zero line after the positive crossover), then this is very strong bullish or buying signal for the particular stock.

 • When the negative crossover happen upon the Zero line or below the Zero line ( until the both lines comes below the Zero line after the negative crossover), then this is very strong bearish or selling signal for the particular stock.