We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • RT @jessefelder: 'In data going back to 1984, the S&P 500, crude oil and gold have never jumped at least 10% together through the first thr…
  • Is there a scenario where we could still hit a 'no-deal' Brexit by default ('cutting the brake lines' as it were)?
  • US Treasury Yields Update: 2-Year: 1.621% 3-Year: 1.604% 5-Year: 1.614% 7-Year: 1.702% 10-Year: 1.791% 30-Year: 2.271% $TNX
  • Crude Oil Prices Jump on OPEC Supply Cut Hopes This December - via @DailyFX https://www.dailyfx.com/forex/market_alert/2019/10/22/crude-oil-prices-jump-on-OPEC-supply-cut-hopes-this-december.html $CL_F $USO #OOTT
  • This downdraft by $USDMXN is getting stretched. Nearing significant support. Balance of risk trends and trade wars skews for Dollar, perhaps not Fed anticipation though https://t.co/3qUW15hY8x
  • Will gold benefit from turmoil in the markets? And what impacts are geopolitical risks having on #oil? Find out from @Monte_IG of @IGMENA only on Trading Global Markets Decoded #podcast. Tune in today! https://t.co/Mv1GatGlLb https://t.co/RHvcnlcsXz
  • UK PM Johnson ready to accept a 10 day Brexit delay - Financial Times
  • Secretary Mnuchin says the Financial Stability Oversight Council has created a subcommittee to address cryptocurrencies $BTC #Libra
  • $CL_F $USO #WTI https://t.co/z9ELWaNDqo
  • AUD/USD, NZD/USD Price Forecast: Bullish Signals and Critical Levels More details in the link below: https://www.dailyfx.com/forex/technical/home/analysis/aud-usd/2019/10/22/AUDUSD-NZDUSD-Price-Forecast-Bullish-Signals-and-Critical-Levels-MK.html?CHID=9&QPID=917714 https://t.co/gyZPcuj678
Here's an Easy Way to Enter a Trade Sooner Using MACD

Here's an Easy Way to Enter a Trade Sooner Using MACD

2012-04-10 03:00:00
Richard Krivo, Trading Instructor
Share:

Traders who use the MACD indicator often are critical of the fact that it will signal an entry after the initial move has begun and therefore leave pips behind. As such, many traders wanting to enter a trade sooner dismiss it as a “lagging” indicator.

(For those of you who want to learn about the other side of the story, the merits of lagging indicators, take a look at this article.)

In the case of the MACD indicator, the most widely used entry signal is when the MACD line crosses over the Signal Line in the direction of the Daily trend. Since these two lines are simply two moving averages, by their very nature the crossover will not occur until the move itself is under way. And, since that crossover is the entry signal, this will get you into the trade after the initial move has begun. Some traders prefer this method of entry as it offers more confirmation that the move is more likely to continue in that direction.

For more aggressive traders who are not interested in the additional confirmation and are simply looking for an early entry, they may prefer a less widely used entry signal based on the histogram bars.

As seen on the 1 hour chart of the EURUSD below, as soon as price action begins to move to the downside, the green histogram bars will begin to shorten. As soon as a bar does not close above the previous bar, that means that upside movement by price has subsided for that moment in time. An aggressive trader can use that as a signal to short the pair at that point.

Traders who are a little less aggressive may prefer to wait until a few histogram bars (perhaps 3-5) in a row close continually lower…or continually higher in an uptrend. This will provide greater confirmation than just one histogram bar but generally will be a quicker entry than waiting for the MACD Line to crossover the Signal Line. As can be seen on the chart below, although the bearish move has begun, the crossover entry signal has not yet taken place.

Here's an Easy Way to Enter a Trade Sooner Using MACD

Note how a trader entering based on the histogram bars would have entered the trade ahead of a trader who entered based on a MACD/Signal Line crossover.

Each of the above entries based on MACD is a valid entry. As usual, it is up to each individual trader to decide which one is right for them.

Keep in mind however, as stated in the linked article about lagging indicators, entering a trade sooner means entering with less confirmation and that is not always a good thing.

Next: Indicators are like golf clubs (50 of 63)

Previous: Trading with MACD

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.