Use MACD With This SPECIAL Settings... BEST MACD Settings for Scalping and Day Trading
Summary
TLDRThis video tutorial introduces a specialized MACD setting for identifying market trends on shorter time frames, ideal for scalping and day trading. The recommended settings are a fast length of 34, a slow length of 144, and a signal smoothing of 9, with only the histogram displayed. The MACD is used to detect the current market direction and potential trend changes, not for direct trading signals. The video also explains how to interpret divergences as signs of weakening trends, emphasizing that color changes in the histogram are not trading signals but indicators of trend strength.
Takeaways
- 📊 The MACD (Moving Average Convergence Divergence) is a popular indicator used by traders of all types, including scalpers and long-term traders, for identifying trends, measuring momentum, and evaluating trend strength or weakness.
- 🔍 The video introduces a specific MACD setting suitable for shorter time frames, ideal for scalping and day trading, which emphasizes the histogram over the MACD and signal lines.
- 🛠️ To apply this setting on TradingView, one must adjust the fast length to 34, the slow length to 144, and keep the signal smoothing at 9, then disable the display of MACD and signal lines.
- 📈 The Hiken Ashi chart type is recommended for better alignment with the MACD histogram, reflecting price advances, declines, and pullbacks.
- ⏱️ This MACD configuration is particularly useful on shorter time frames, such as the one-minute chart shown, and can be adapted for other intraday time frames.
- 🚫 The special MACD setting is not intended for generating trading signals but for identifying the current market direction and potential trend changes.
- 🟢 A bullish trading strategy could involve taking trades in the direction of the market when the MACD histogram is green, indicating low-risk signals as entries align with the market trend.
- 🟡 Divergences, where price action and the MACD histogram show opposing movements, suggest weakening trends and potential trend reversals, though not guarantees.
- 🔴 During downtrends, the MACD histogram turning red signifies bearish momentum, and only bearish crossovers should be considered for trades.
- 🔄 In a trading range, the MACD histogram may frequently change colors before the market establishes a clear direction, indicating the MACD's color change is not a reliable trading signal.
- 👀 The video emphasizes the importance of using the MACD histogram with these settings for trend identification rather than as a standalone trading tool, and to be cautious of false signals.
Q & A
What is the primary purpose of the MACD indicator according to the video?
-The primary purpose of the MACD indicator, as discussed in the video, is to identify trends, measure momentum, evaluate the strength or weakness of a trend, and discover reversal points in the market.
What are the specific settings for the MACD indicator recommended in the video for shorter time frames?
-For shorter time frames suitable for scalping and day trading, the video recommends setting the fast length at 34, the slow length at 144, and the signal smoothing at 9.
Why is it suggested to uncheck the MACD and Signal lines in the video?
-The video suggests unchecking the MACD and Signal lines because, in the described method, only the histogram is needed for identifying the current direction of the market.
What chart type is recommended to better match with the MACD histogram according to the video?
-The video recommends setting the chart type to Heikin Ashi to better match with the MACD histogram, as it better reflects the advancing and declining of the price and the pullbacks.
What is the recommended time frame for using the special MACD settings discussed in the video?
-The recommended time frame for using the special MACD settings is the one-minute chart for intraday trading, although it can be used on other intraday time frames as well.
How should the MACD indicator with the special settings be used in trading strategies according to the video?
-The MACD indicator with the special settings should be used for identifying the current direction of the market and possible changes in the trend, not for direct trading signals. It can be used alongside other indicators or on a different screen for reference.
What does the video suggest about taking trading signals from the MACD histogram?
-The video suggests taking only bullish crossovers when the MACD histogram is green and bearish crossovers when it is red, as these are considered low-risk trading signals since they align with the market direction.
What is a Divergence as mentioned in the video, and what does it indicate?
-A Divergence, as mentioned in the video, occurs when there is a discrepancy between the price action and the MACD histogram. For example, a bearish divergence indicates that the price made a higher high, but the histogram made a lower high, suggesting that the upside momentum is losing strength and the trend may weaken or reverse.
How does the video explain the behavior of the MACD histogram during a well-developed trend?
-The video explains that during a well-developed trend, if a divergence occurs, it suggests that the trend might be weakening. However, it emphasizes that a divergence is just a possibility and not a guarantee of a trend change.
What is the importance of observing the color change of the MACD histogram according to the video?
-According to the video, the color change of the MACD histogram should not be used as a trading signal. Instead, it is used to identify the current trend and possible changes in market direction, especially in the context of trend strength and potential reversals.
What should a trader do if they observe a deep correction or pullback in the market while using the MACD settings from the video?
-If a trader observes a deep correction or pullback, they may see a slight change in the MACD histogram color, which could then revert back to its previous state. The video advises that such changes do not necessarily indicate an immediate trend reversal and could lead to a trading range before the market establishes a new trend.
Outlines
📊 Introduction to MACD and Its Versatility
MACD (Moving Average Convergence Divergence) is a highly popular indicator among traders, ranging from scalpers to long-term traders. It serves multiple purposes, such as identifying trends, measuring momentum, and evaluating trend strength or weakness. MACD can also be used to discover market reversal points. This video focuses on a specific MACD setting ideal for short-term trading, particularly scalping and day trading.
🛠️ Setting Up MACD for Short-Term Trading
To set up MACD for short-term trading on TradingView, add the indicator and adjust the settings: set the fast length to 34, slow length to 144, and signal smoothing to 9. Uncheck the MACD and Signal lines in the Style tab to focus solely on the histogram. Use Heikin Ashi chart type for better alignment with the MACD histogram. This setup is designed to identify market direction, not trading signals, and is best used on shorter time frames like the one-minute chart.
📉 Comparing Default and Customized MACD Settings
Comparing the customized MACD settings with the default settings highlights the stability of the custom setup. In an uptrend, the default MACD gives frequent false signals with multiple color changes, while the customized MACD remains consistent. This stability makes it suitable for identifying trend direction, with strategies like taking bullish crossovers during green histogram periods or bearish crossovers during red histogram periods.
🔄 Identifying Trend Changes and Divergences
The customized MACD is used to identify trends and possible trend changes. A well-developed trend showing divergence, such as higher highs in price but lower highs in the histogram, indicates weakening momentum. For instance, a bearish divergence suggests the current uptrend may lose strength, although it doesn't guarantee an immediate reversal. The histogram color should not be used for trading signals but for identifying trend direction and potential changes.
📈 Practical Tips and Conclusion
Traders should note that trend weakening does not necessarily mean an instant reversal; the price might enter a trading range before finding a new direction. The histogram may change colors frequently during such periods. The customized MACD setup aims to identify the current market trend and potential directional changes, not to provide direct trading signals. The video concludes with a thank you to viewers and an invitation to subscribe for more content.
📢 Closing Remarks and Trading Wishes
The video ends with the presenter thanking viewers for watching and encouraging them to leave questions and comments. Viewers are also prompted to subscribe to the channel and hit the notification bell for updates on new videos. The presenter wishes viewers good luck with their trading endeavors.
Mindmap
Keywords
💡MACD
💡Histogram
💡Trend Identification
💡Momentum
💡Scalping
💡Signal Line
💡Haken Ashi Chart
💡Bearish Divergence
💡Bullish Crossover
💡Intraday Time Frames
Highlights
MACD is a popular indicator among traders for various use cases such as identifying trends, measuring momentum, and evaluating the strength or weakness of a trend.
The video will share a specific MACD setting suitable for identifying trends on shorter time frames, ideal for scalping and day trading.
To set up the MACD on TradingView, search for 'Moving Average Convergence Divergence' and adjust the fast length to 34, slow length to 144, and signal smoothing to 9.
In the style tab, uncheck the MACD and Signal lines to focus on the histogram for this specific method.
Setting the chart type to Haken Ashi chart is recommended for better matching with the MACD histogram.
The MACD setting is used for identifying the current market direction rather than providing trading signals.
The MACD histogram with special settings can clearly show the market trend, turning red during a downtrend and green during an uptrend.
A trading strategy could involve taking bullish crossovers when the MACD is green, indicating low-risk trading signals.
Divergence in the MACD histogram can indicate a weakening trend, suggesting a possible trend stop or reversal.
Bearish divergence occurs when the price makes a higher high but the histogram makes a lower high, signaling a loss of upside momentum.
A bearish divergence increases the probability that the current trend may end, as seen when the price turns to a downtrend.
A deep correction or pullback may cause a slight change in the histogram color before it reverts back to its previous status.
A trading range can lead to continuous color changes in the histogram before the market establishes a clear direction.
The color change of the MACD histogram is not used as a trading signal in this setup; it's for identifying trends and potential changes.
The MACD with default settings can give false signals, making the special settings more consistent during trends.
The video concludes with a reminder that the MACD with special settings is for trend identification and not for direct trading signals.
The presenter encourages viewers to subscribe to the channel and hit the bell for notifications on new videos.
Transcripts
macd is one of the most popular
indicator among traders of any type from
scalpers to long-term Traders it has
different use cases like identifying
Trends measuring momentum and evaluating
strength or weakness of a trend
discovering reversal points of the
market and some other use cases when
used with other tools with different
settings on different time frames it has
different behavior and in this video I'm
gonna share a setting for macd which
makes it an excellent tool for
identifying Trends on shorter time
frames suitable for scalping and day
trading let's add a macd to our chart on
trading view platform here we click on
indicators and we simply search macd
moving average convergence Divergence
this one after adding it to our chart
here we go to add settings and for the
fast length we set it at 34 for slow
length we set it at 144 and for the
signal smoothing 9 is fine then we go to
style Tab and we uncheck macd and Signal
lines because in this method we only
need the histogram we click on OK and
our Mac T is ready for use and trading
it's better to set your chart type on
haken Oshi chart so it will better match
with the macd histogram and advancing of
the price declining of the price and the
pullbacks the time frame here is one
minute and you can use it on other
intraday time frames but it's better to
use this macd settings on shorter time
frames this macd setting is used only
for identifying the current direction of
the market not for trading signals and
you can use it in your trading strategy
alongside with other indicators or if
it's not possible you can have this
setup on different screen or Tab and use
it for discovering direction of the
market and possible changes in the
current Trend as you probably realized
by now you can clearly see how this macd
histogram with the special settings is
matched with the trend of the market
here the market is in a downtrend and
the macd histogram is red in this period
and here the market is in an uptrend and
you can and see that how macd histogram
also responded and turned to a green
histogram to show you how I'm active
with default settings looks like let me
add another macd
and compare them together
in this period of uptrend you can see
how the macd with default settings is
acting lots of changes in the histogram
it turned to Red many times giving false
signals that the trend is possibly
changing and you see how the uptrend
continued its move but for this macd
with the special settings we can see how
it stayed consistent during this uptrend
one trading strategy here could be
taking only bullish crossovers from this
macd while this macd is green these are
low risk trading signals because the
trade entries are in the direction of
the market not against it we have the
same for downtrends while the smack tea
is red we only take bearish crossovers
from this Mac T alright let me close
this macd and give you some important
points here as I said earlier we use
this macd with this special settings
only for identifying Trends and possible
changes in the current Trend when a
trend is well developed and then we have
a Divergence it means that the trend is
probably weakening for example here you
can see that we have a bearish
Divergence the price made higher high
but the histogram made lower high that
shows that the upside momentum is losing
strength and on the other hand the
downside momentum is gaining strength
and there is a possibility that the
trend may stop or a reversal may happen
please pay attention that this is just a
possibility and nothing more as long as
that the macd histogram is green and
above zero the upside momentum is
greater than the downside momentum and
you can see that in this case the price
continued higher but the upside momentum
is really losing a strength another
bearish Divergence happened here giving
more probability that the current trend
is going to end and you can see that
after that the price turned to a
downtrend and with this macd histogram
turning to Red from here all the way up
to here sometimes when we have a deep
correction or pullback like what
happened here we may have a change in
the histogram slightly and after that
turning back to its previous status also
pay attention that when a trend losing a
strength like what happened here it
doesn't necessarily mean that a reversal
is going to happen instantly and the
price may go to a trading range and in
the case of having a trading range we
may have our histogram changing color
continuously before the market Finds Its
Direction and establish a trend that's
why we don't use color changing of this
macd histogram as trading signals with
this macd histogram and these settings
our purpose is not looking for trading
signals we only use this setup for
identifying the current Trend and
possible changes in the direction of the
market alright that's it thank you for
watching this video if you have any
questions feel free to ask and leave a
comment for me I'll answer your
questions as soon as possible if you
haven't subscribed to my Channel Please
Subscribe and hit the Bell so you get
the notifications of my new videos see
you guys in next video and good luck
with your Trading
Voir Plus de Vidéos Connexes
MACD Indicator Explained: 4 Advanced Strategies
$SPY WEEKLY STOCK MARKET UPDATE $SPY $NVDA $BTC
根据两种【距离】,最深入解析MACD的运用逻辑!【MACD PART 1 | 技术分析基础教学】(CC字幕)
Special Indicator for Professional Scalpers! This Indicator Is Game-Changing !
How to Trade Using CVD Divergences | Day Trading Guide
How To Get An Edge In Forex Using Statistical Thinking - Trade Like A Forex Titan Part 3
5.0 / 5 (0 votes)