There are several indicators that dedicate their existence to help traders and investors in identification of trend reversal, however, very few are up to the cause. Majority of the indicators tend to interpret price correction as trend reversal, owing to which they generate false trading opportunities. MACD (Moving Average Convergence Divergence) is one of the few indicators that provides genuine trend reversals most of the time. Traders tend to argue that the trading signals generated by MACD indicator are at times delayed in comparison to other trend reversal indicators. To counter this argument, MACD indicator offers better accuracy that any other indicator belonging to the same class. It is because of this added advantage; majority of traders and investors tend to consult the MACD indicator before placing their bets.
MACD indicator is very easy to interpret as it comprises of two lines, particularly known as the MACD line and the Signal line. MACD Line is the line that represents positive trend and Signal line is the one that represents negative trend. It is the crossover of these lines that gives us the change or reversal in trend. There is yet another element, known as the Histogram that helps in judging the momentum of the ongoing trend. All of the aforementioned combined, a trader is in a position to take highly informed decision regarding his investment.
The Smart Trader + software offered by Trader Guide offers one of the versions of trading on Bollinger bands. It provides the traders with a list of stocks that were either in over bought or over sold region and have now started showing a reversal.
Trader Guide, in its web based software, Smart Trader + offers a screener called Query Builder that encompasses MACD crossover strategy which will present the users directly with the list of stocks that are experiencing MACD crossover on both positive and negative side.
Following are the results that appeared on the Query Builder in Dec 1, 2018: -
From the aforementioned pic, it can be observed that the MACD crossover has generated several results on both sides and a trader can select their trades according to this view on the index.
There are several other fruitful strategies that are available in the Smart Trader + software offered by Trader Guide. It is highly advisable to every trader to visit the website , and get a view of the wonderful offerings by Trader Guide.
- Anand Singh Gaur
- Sunil Kothari