macd
Technical Indicators

MACD (Full Blog)

WHAT IS MACD?

MACD is an acronym for Moving Average Convergence Divergence.

Developed by Gerald Appel in the late seventies, the Moving Average Convergence/Divergence oscillator (MACD) is one of the simplest and most effective momentum indicators available. The MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from the shorter one. As a result, the MACD offers the best of both worlds: trend following and momentum. The MACD fluctuates above and below the zero line as the moving averages converge, cross and diverge.

UHHHMM...KAY?

Don’t worry hihimayin natin si MACD para maging simple. Natapos na natin si Exponential Moving Average (EMA) diba? Alam ninyo na si EMA pati formula nito. Lets take a look at MACD’s formula.

THE MACD FORMULA

MACD Line: (12-day EMA – 26-day EMA)

Signal Line: 9-day EMA of MACD Line

MACD Histogram: MACD Line-Signal Line

MACD Calculation

VISUAL REPRESENTATION NG FORMULA

MACD Visual representation in chart

Dalawang EMA-EMA12 at EMA26

MACD Visual Representation

Ang MACD INDICATOR ay binubuo ng:

  • MACD LINE
  • HISTOGRAM
  • SIGNAL LINE
  • at ZERO or ZERO LINE.
MACD Visual Representation

To be more specific, the MACD line is the 12-day Exponential Moving Average (EMA) less the 26-day EMA. Closing prices are used for these moving averages. A 9-day EMA of the MACD line is plotted with the indicator to act as a signal line and identify turns. While the MACD Histogram represents the difference between MACD and its 9-day EMA, the signal line. The histogram is positive when the MACD line is above its signal line and negative when the MACD line is below its signal line.

The values of 12, 26 and 9 are the typical settings used with the MACD, though other values can be substituted depending on your trading style and goals.

SLOW AND FAST EMA

12, 26, 9 and typical settings ni MACD but if titingnan mo it’s just one faster (shorter) EMA at one slower longer) EMA at 9-day na EMA ng MACD LINE. If mag aadjust kayo ng settings importante na naiintindihan ninyo ang foundation ng formula ni MACD.

LET US SIMPLIFY

MACD LINE

MACD LINE-Shorter EMA minus longer EMA equals MACD LINE.

EMA12 - EMA26 = MACD LINE

SAMPLE: EMA12= 2, EMA26= 1.5

2-1.5=0.5

MACD LINE = 0.5

SIGNAL LINE

SIGNAL LINE. 9-day EMA ng MACD LINE.

Take note 9-day EMA ng MACD line ha hindi ng price.

Day1 MACD LINE = 0.5
Day2 MACD LINE = 0.4
Day3 MACD LINE = 0.6
Day4 MACD LINE = 0.2
Day5 MACD LINE = 0.3
Day6 MACD LINE = 0.4
Day7 MACD LINE = 0.5
Day8 MACD LINE = 0.7
Day9 MACD LINE = 0.6

Kunin mo ang 9-day EMA niya at yun ang SIGNAL LINE mo sa day 9.

Kunyare na solve na natin ang 9-day EMA ng macd line at ang result is kunyare 0.4

HISTOGRAM

SO, if MACD LINE sa day 9 is 0.6 at yung kunyare na SIGNAL LINE is 0.4

Histogram will be:

Histogram = 0.6 – 0.4

Histogram = 0.2

In short ang histogram ay distance ng MACD LINE from SIGNAL LINE.

 

 

MACD Visual representation in chart

CROSSOVERS

If magcross ang MACD sa SIGNAL LINE na MACD and nasa taas ang tawag ay bullish crossover.

If magcross ang MACD sa SIGNAL LINE na MACD and nasa baba ang tawag ay bearish crossover.

ANO NGAYON ANG CROSSOVER?

Ito yung kagandahan kapag hinihimay mo kasi naiintindihan mo kung ano ba talaga ang mga bagay bagay. So, kapag sinabe mo na bullish cross over meaning magcross pataas ang MACD LINE mo sa SIGNAL LINE. Since ang MACD LINE is shorter EMA minus by longer EMA (EMA12 -EMA26) meaning kailangan unti unting umaangat ang price para umangat ang value ng shorter EMA mo.

Since ang SIGNAL LINE ay 9-day EMA ng MACD meaning para magkaroon ka ng bullish crossover ay kailangan paakyat ng paakyat ang price ng stock hanggang yung MACD line mo ay mas mataas na ang value kesa sa signal line mo.

Mas mataas na ang value ng MACD LINE mo kesa sa average ng 9 na araw na MACD LINE.

MACD Bullish Crossover

Sample:

Day1 MACD LINE = 0.5

Day2 MACD LINE = 0.4

Day3 MACD LINE = 0.6

Day4 MACD LINE = 0.2

Day5 MACD LINE = 0.3

Day6 MACD LINE = 0.4

Day7 MACD LINE = 0.5

Day8 MACD LINE = 0.7

Day9 MACD LINE = 0.6

Kunyare ang 9-day EMA nito is 0.4

Para magkaroon ka ng bullish cross over dapat paakyat ang mga susunod na MACD LINE mo mula day 10 or dapat mas mataas sa 0.4 sa mga susunod na araw. Para mangyare to dapat paakyat din ang price kasi ang formula ng macd is EMA12-EMA26.

 

 

 

 

MACD Visual representation in chart

BEARISH CROSSOVER

So, kapag sinabe mo na bearish cross over meaning magcross pababa ang MACD LINE mo sa SIGNAL LINE. Since ang MACD LINE is shorter EMA minus by longer EMA (EMA12 -EMA26) meaning kailangan unti unting bumagsak ang price para umangat ang value ng shorter EMA mo.

Since ang SIGNAL LINE ay 9-day EMA ng MACD meaning para magkaroon ka ng bearish crossover ay kailangan pabagsak ng pabagsak ang price ng stock hanggang yung MACD line mo ay mas mababa na ang value kesa sa signal line mo.

Mas mababa na ang value ng MACD LINE mo kesa sa average ng 9 na araw na MACD LINE.

MACD bearish crossover

Sample:

Day1 MACD LINE = 0.5
Day2 MACD LINE = 0.4
Day3 MACD LINE = 0.6
Day4 MACD LINE = 0.2
Day5 MACD LINE = 0.3
Day6 MACD LINE = 0.4
Day7 MACD LINE = 0.5
Day8 MACD LINE = 0.7
Day9 MACD LINE = 0.6

Kunyare ang 9-day EMA nito is 0.4

Para magkaroon ka ng bearish cross over dapat pababa ang mga susunod na MACD LINE mo mula day 10 or dapat mas mababa sa 0.4 ang mga susunod na araw. Para mangyare to dapat pababa din ang price kasi ang formula ng MACD LINE is EMA12 – EMA26.

MACD bearish crossover

HAVE YOU NOTICED?

Every time nagcross ang shorter EMA above longer EMA (EMA12 cross above EMA26) yung MACD LINE ay nagcocross din above zero line.

Every time nagcross ang shorter EMA below longer EMA (EMA12 cross below EMA26) yung MACD LINE ay nagcocross din below zero line.

 

MACD Crossover

Yan ang MACD. Habang paangat ng paangat ang price umaangat din ang MACD line. Kung pababa naman bumababa din.

Bakit MACD ang gamit sa MAMA STRATEGY?

Dahil yan sa rate at speed ng galaw ni MACD.

ALMA is better than EMA at MA dahil sa speed. Nasa gitna siya halos. Di sobrang bilis. Di rin sobrang bagal. To compensate sa mga fake outs na dala ni ALMA since mas mabilis siya ky MA kaya may MACD. That’s one part. Next part is para makuha mo si MACD gagamitan mo ng dalawang EMA so yung fake outs ni ALMA ay e cocorrect ni MACD.

You often ask kung anong uri ng strategy si MAMA.

It is both momentum and trend following. Hybrid siya actually. Bakit both? Balikan ninyo definition ni MACD.

“The MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from the shorter one.”

I will discuss more indicators. Hihimayin natin isa isa yung tipong piece by piece at part by part. I learned all these indicators through solving their formulas at plotting them sa graphing paper. Marami pa tayong e didiscuss. Stay tuned sa mga upcoming blogs.

41 Comments

  • ging

    wow, this is a treasure sa aming mga newbie GK, sobrang appreciated. thanks for taking the pain to teach us after you took the hard way of understanding the beauty of this indicator. giving my best to learn so i can pay forward po.

  • Gol D Roger

    Ibig sabihin pala kapag extreme yung value ng MACD line or sobrang layo sa gitna,
    sobrag lakas ng momentum niya/rallying.
    Galing sa pinaka malayo niya sa zero, kapag nagbago yung curve pabalik sa zero, ibig sabihin humihina ang momentum.
    Kaya pala maganda tignan ang MACD as momentum indicator.

    Iniisip ko lang ngayon,
    paano naiplot yung EMA-9/MACD signal line sa graph ng MACD oscillator?
    Iniisip ko kasi laging positive si EMA-9/MACD signal line. Paano siya narelate sa zero line?
    Paano related si EMA-9/MACD signal line sa MACD line(na related sa zero line kasi dahil +/-)?

    Thank you sa makakapagliwanag!

  • Lance Diwa

    The explanation is crystal clear mas maiintihan naman mga newbies why MACD is important as trend and momentum indicator, having said that mas magagamit name ang MACD sa mga trading namen. You are right mas magiging convince ka gamitin ang isiang indicator kung alam mo ang formula at ano ang purpose niya. Thank you

  • Jayr

    Thank you for this ms Gandakoh, since i joined to our group in TL lots of improvement of my side and you inspired me to help more . Bless more and i admire your principles plz don’t change despite of negative comments and people want to trick you to change ur principles.. we’re here coz we believe your principles..more power for TL ..kudos ms. Ganda koh ❤️

    Mc jay

  • arvin cipriano

    Mam gandahkoh Salamat po napaka clear ng itinuturo nyo sa blog sobrang appreciate namin…

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: