macd trading strategy scoping strategy best one that I found I'm going to share it with you here in just a few minutes it could be a really short video hang on till the end because I will be sharing with you the one strategy that works the best and the best way to use this indicator and again just be in just a few minutes now this is part three of a series so if you haven't seen the other two I will put the links in the description below in fact they'll be there as soon as you see this and you can go through those but while you're here you can also go ahead and watch this one first so there are three parts to this indicator we've covered the first two in Parts one and two macd stands for moving average convergence Divergence and the two moving averages that are traditionally used you can change these if you want to but traditionally it's the 12 and the 26 exponential moving averages and that's the blue line that's the make D line and then the red line here is the what they call the signal or the smoothing and that is a nine period exponential moving average of the blue line and again the blue line is the difference between the 12 and the 26. so it is not a trend indicator it's an acceleration indicator it tells you how fast is the 12th period exponential moving average moving away from the 26. so it's an acceleration indicator so the problem is okay how do we read this what is a shortcut way of reading this and so now we've added uh let's see here oh I've already added it yeah so now we've added what we call the histogram and by the way in some trading platforms we'll be called diff dff or difference which actually in my mind is a better term because histogram is just a way of plotting any indicator it's just a plot style but with this measuring is the difference between these two lines because just eyeballing it and I love to have things that are very objective and Rule based and if you just eyeball the difference it can be kind of tough to tell so again the difference is between these two lines so whereas macd measured the difference between the two moving averages and the signal line the red line is just a smoothing of that so you don't have to be worried about all these little Jiggles and wiggles now the macd histogram is down here and that's not going to measure the distance between the two moving averages we've already got the blue line for that that's going to measure the difference between the two lines of the indicator the macd line and the signal line and so it's also measuring the difference but now between the two lines of the indicator so this is perhaps one of the easiest ways to read the indicator so if you'll notice here and let me get some new notations on here take the little dots off of there and what you'll see if you just look at these two lines it can be kind of hard to tell okay what are they moving toward each other when are they moving away from each other and this makes it really easy by the way what the color coding means is when it's green that means the blue lines above the red when they're red it means the blue lines below the red so if you look here you will see that when they cross the histogram is at zero zero because there's no difference between the two lines on the indicator and when the blue line is below the red line again it's a faster line then they go red so that's nice then you'll notice that there's two shades and so what that means is when you have a darker shade that means that the blue line is pulling away from the red line indicating again acceleration all right so uh here we've got in these this here these four bars you could just take a look at this and you can see oh okay so because it's dark green that means that the blue line is actually moving away it's not moving parallel but it's moving away from the average uh the nine exponential period moving average of the macd line and therefore we have what acceleration and why is that important that equals strength of Market move now here we get light bars they're still green and why are they green because again the blue lines above the the red so as long as there's that then they're going to be green but they're moving toward each other and so that means still in barrier or bullish territory but acceleration has slowed down a bit between these two lines and so it's a beautiful nice simple that's what I love about this it's simple color coding so that you don't have to be sitting there and measuring all of this stuff out mathematically using a Texas Instruments calculator as we used to do in the days of your so color coding cool thanks like it now um same thing on the bearish side so it should come down we're going to have to wait for again now notice the green line still above the red here short-term moving average above the long term but that's not what macd is measuring make tree is measuring the difference between the indicators the two lines of the indicators so it's actually catching this when this line crosses that line where it's zero and then when the faster line is moving away from the slower line accelerating against it say look at the angles then it turns dark red so what that means is we've got strength to the downside so let's take an example let's finish up as I promised I will show you at the very end here how to trade this and this is what we're going to do so we look for Trend first remember Step One is Trend macd does not measure Trend and that's covered in um Parts one and two of this video so first we want to trade in the direction of the trend and then we look for strong Trends and this indicator helps us do that we wait for it to go to a dark red of course you can color clear these any way that you want and then we say okay the trend is down but some Trends are weak and some Trends are strong just because the market has an uptrend doesn't mean it's going to go very fast and furious in that direction but we love markets to go fast and furious in our Direction so that we make more money well faster and more Furious but no we make it faster Furious is when we lose money so that's what we're going to do in this you can see when you look at Price action sure enough the market actually did move down very very fast so nice price range if you look at the price range here from that high to that low nice price range in and this is what I like to do draw a rectangle so if your rectangle is taller then it is wide that means you have a very strong move and that is literally making a lot of money as determined by the range of the price in a short period of time and is determined by the number of bars that go by or the time here so when you get a tall Network range rectangle on that move down that is a nice beautiful fast profit of course the big problem a lot of people have is remember this indicator is not measuring Trend or it's not measuring timing that's a big question when do I get into these trades because you can't just enter on any one of these red bars for example look at this one here's a red bar that's darker red than the others but you wouldn't want to go short there that that'd be no bueno and you wouldn't want to buy this even though it is a dark green bar so you don't want to buy that so how do you determine when to enter the trade the timing issue and that's another dimension of the chart and so we don't have time to go into that right now but fortunately I did record a longer presentation on that that I give for free to all of my viewers and it probably the indicator that I use for this my market timing entry indicator and you can get it for free get the recording it's available 24 7. no charge to my viewers go to indicator webinar.com pick it up and I teach you how to use it and the patterns to trade on it so go get it enjoy it oh by the way subscribe to the channel I need more subscribers and by the way it'd be benefit for you when you subscribe is then get notified when I come out with new videos and of course all these videos and try to provide as much value as possible and give you good good trading lessons that you can apply to your personal Trading [Music] thank you [Music]