2 min
Aug 2, 2024
Indicators
The MACD Indicator
The MACD Indicator
The MACD (Mean Average Convergence Divergence) indicator is a classic tool in traders' arsenals. It provides insights into the strength, momentum, and duration of a trend. The indicator consists of three main components: the MACD line (the difference between two moving averages), the Signal line (an exponential average of the MACD line), and the histogram, which represents the difference between the MACD line and the Signal line.
Lucas Inglese
Lucas Inglese
Trading Instructor
The MACD Block Configuration
On BullTrading, you have several options to configure each block uniquely. In this block, you can set the time unit, periods used, and more.
Time Unit
Since BullTrading allows for multi-timeframe strategies, you can choose the time period for calculating this indicator. There are two options:
Default: If set to Default, the time unit will vary based on the timeframe used in the backtest.
15m, 30m, 1d, etc.: Choosing a specific time unit means this setting will apply regardless of the time unit selected for backtesting your strategy.
TIPS: If you’re a beginner, it’s recommended to leave the time unit on Default.
Period Slow
To create the MACD line, two moving averages are needed. The slow period in the "Period Slow" parameter represents the period used to calculate the slow moving average necessary for the MACD line.
Period Fast
Here, you define the period of the second moving average used in the MACD line calculation.
Period Signal
The Signal line is an exponential moving average of the MACD line. You’ll need to choose the period used for this moving average.
Signal Type
This parameter has two options: CrossOver and Position. Here’s the difference:
CrossOver: If you select CrossOver as the signal type, this block will validate only when the MACD line crosses above or below the Signal line.
Position: With this option, the block is validated as long as you are in the selected Trigger Type (Bearish or Bullish).
TIPS: The CrossOver parameter is more restrictive, making it useful when combining only one or two indicators. However, using too many blocks with CrossOver will significantly reduce the number of trades in your strategy, as it requires, for example, a crossover between the two MAs + a crossover at the RSI 70 threshold + a crossover in the Vortex indicator.
So, if you’re a beginner, avoid setting more than one or two blocks to CrossOver when combining multiple indicator blocks.
Trigger Type
This parameter has two options: Bullish or Bearish. Here’s the difference:
Bullish: If the trigger type is set to Bullish, the block is validated if the MACD line is above the Signal line.
Bearish: If the trigger type is set to Bearish, the block is validated if the MACD line is below the Signal line.
The MACD Block Configuration
On BullTrading, you have several options to configure each block uniquely. In this block, you can set the time unit, periods used, and more.
Time Unit
Since BullTrading allows for multi-timeframe strategies, you can choose the time period for calculating this indicator. There are two options:
Default: If set to Default, the time unit will vary based on the timeframe used in the backtest.
15m, 30m, 1d, etc.: Choosing a specific time unit means this setting will apply regardless of the time unit selected for backtesting your strategy.
TIPS: If you’re a beginner, it’s recommended to leave the time unit on Default.
Period Slow
To create the MACD line, two moving averages are needed. The slow period in the "Period Slow" parameter represents the period used to calculate the slow moving average necessary for the MACD line.
Period Fast
Here, you define the period of the second moving average used in the MACD line calculation.
Period Signal
The Signal line is an exponential moving average of the MACD line. You’ll need to choose the period used for this moving average.
Signal Type
This parameter has two options: CrossOver and Position. Here’s the difference:
CrossOver: If you select CrossOver as the signal type, this block will validate only when the MACD line crosses above or below the Signal line.
Position: With this option, the block is validated as long as you are in the selected Trigger Type (Bearish or Bullish).
TIPS: The CrossOver parameter is more restrictive, making it useful when combining only one or two indicators. However, using too many blocks with CrossOver will significantly reduce the number of trades in your strategy, as it requires, for example, a crossover between the two MAs + a crossover at the RSI 70 threshold + a crossover in the Vortex indicator.
So, if you’re a beginner, avoid setting more than one or two blocks to CrossOver when combining multiple indicator blocks.
Trigger Type
This parameter has two options: Bullish or Bearish. Here’s the difference:
Bullish: If the trigger type is set to Bullish, the block is validated if the MACD line is above the Signal line.
Bearish: If the trigger type is set to Bearish, the block is validated if the MACD line is below the Signal line.
The MACD Block Configuration
On BullTrading, you have several options to configure each block uniquely. In this block, you can set the time unit, periods used, and more.
Time Unit
Since BullTrading allows for multi-timeframe strategies, you can choose the time period for calculating this indicator. There are two options:
Default: If set to Default, the time unit will vary based on the timeframe used in the backtest.
15m, 30m, 1d, etc.: Choosing a specific time unit means this setting will apply regardless of the time unit selected for backtesting your strategy.
TIPS: If you’re a beginner, it’s recommended to leave the time unit on Default.
Period Slow
To create the MACD line, two moving averages are needed. The slow period in the "Period Slow" parameter represents the period used to calculate the slow moving average necessary for the MACD line.
Period Fast
Here, you define the period of the second moving average used in the MACD line calculation.
Period Signal
The Signal line is an exponential moving average of the MACD line. You’ll need to choose the period used for this moving average.
Signal Type
This parameter has two options: CrossOver and Position. Here’s the difference:
CrossOver: If you select CrossOver as the signal type, this block will validate only when the MACD line crosses above or below the Signal line.
Position: With this option, the block is validated as long as you are in the selected Trigger Type (Bearish or Bullish).
TIPS: The CrossOver parameter is more restrictive, making it useful when combining only one or two indicators. However, using too many blocks with CrossOver will significantly reduce the number of trades in your strategy, as it requires, for example, a crossover between the two MAs + a crossover at the RSI 70 threshold + a crossover in the Vortex indicator.
So, if you’re a beginner, avoid setting more than one or two blocks to CrossOver when combining multiple indicator blocks.
Trigger Type
This parameter has two options: Bullish or Bearish. Here’s the difference:
Bullish: If the trigger type is set to Bullish, the block is validated if the MACD line is above the Signal line.
Bearish: If the trigger type is set to Bearish, the block is validated if the MACD line is below the Signal line.
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