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The Adaptable MACD indicator is a modified version of the MACD indicator, which is included in the standard Forex set. The indicator calculations are based on the standard MACD version, which is an algorithm designed for trend trading. At the same time, the Adaptable MACD signals are considered more accurate, that is, the indicator itself is effective. It is presented in the lower window of the price chart as a colored histogram with a level of 0 and two signal lines: fast and slow. Taking into account the current values of the indicator, the current trend is determined, and then, taking into account its direction, a certain trade.
The Adaptable MACD indicator is suitable for trading on any timeframe using any currency pair.
Input parameters
Unlike the standard version, the Adaptable MACD indicator has more advanced input parameters that allow to more accurately adapting the indicator to the selected currency pair and timeframe. The Colors section in its settings is used to change the color scheme and general visualization of indicator values, the Levels section is used to add to signal level indicator window.
- Fast MA Period - fast moving average period of the indicator. The default value is 12.
- Slow MA Period - the period of the slow moving average of the indicator. The default value is 26.
- Signal line Period - value of the signal line of the indicator. The default value is 9.
- Fast MA calculation method - fast moving average smoothing type. Default is Simple.
- Slow MA calculation method - The smoothing method applied to the slow moving average. The default value is Simple.
- Signal line calculation method - type of smoothing of the signal line of the indicator. The default value is Simple.
- Applied price - type of price to which indicator calculations are applied. Close price by default.
- Use absolute values - parameter to use the indicator's absolute values. The default value is Yes.
Indicator signals
The use of the Adaptable MACD indicator is very simple, since the algorithm for using it resembles the standard MACD indicator. To open a certain trade, it is needed to determine the direction of the current trend. To do this, it should be taken into account the location of the histogram relative to the signal level, its color, direction and intersection of the signal lines. If the indicator is determined to be upward trend, long positions are opened, while short positions are opened during a downward trend. Positions are closed when the direction of the current market trend changes.
Signal for Buy trades:
- The histogram of the indicator is located above the level 0 and has a color with a growth value. The signal lines are above the level 0, while the fast one is higher than the slow one.
Upon receipt of such conditions on a signal bullish candle, a buy trade can be opened, due to the presence of an uptrend in the current market. The trade should be closed when the current trend changes, namely, when the color of at least one bar of the histogram changes. At this moment, it should be considered opening new trades.
Signal for Sell trades:
- The histogram of the indicator is colored in color with the value of the fall and, together with the signal lines, falls below the level of 0. At the same time, the slow signal is higher than the fast one.
When a full combination of such conditions is received on a signal candle, a sell trade can be opened. At this moment, a downtrend is determined on the market. Such a trade should be closed upon receipt of the opposite conditions from the indicator. Namely, at the moment of changing the color or direction of the histogram. This should be considered as a signal a possible change in trend, which in turn will allow considering the opening of new trades.
Conclusion
The Adaptable MACD indicator is very accurate, since its calculations are based on the use of an algorithm whose effectiveness has been proven by time. Thanks to its convenient visualization, the indicator is very easy to use. At the same time, in order to improve the quality of trading and the correct use of the indicator, it is recommended to use a demo account in advance.
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