Informative World

What MACD & RSI Mean in Forex Trading?

When you are learning the forex trading techniques and working to become proficient it’s important to understand different technical indicators that can help you determine when the best time to buy or sell really is. The MACD & RSI indicators are the two that are most widely used and interpreted to take advantage of the behaviors of the forex macd indicator market.

MACD (Moving Average Convergence Divergence) is a specific method of utilizing moving averages to find signals of when to trade. This method was discovered by Gerald Appel and shows the difference between the 26- day and the 12-day exponential moving average, with the 9-day line for the trigger line. So, generally the way it works is when the MACD falls below the trigger line then it’s the right time to sell and when it rises above the line it’s time to buy.

RSI (Relative Standard Index) measures the market activity determining whether it’s over-sold or over-bought. This can help you gauge which direction the market is going and then you can make the decision about what to do and when to do it. The higher the RSI number is, then it means that the market is more over-bought. The lower the RSI is the market is over-sold. This method can help the most with macro and micro reversals. By using the RSI on a one minute chart at an eighteen period and overlaid with your other charts, you can get the best signals. A five minute chart can be used as well. The entry numbers you are looking for are twenty-five and seventy-five.

So, you can see by taking the time to get to know both of these methods you can find the one that’s right for you or use them in combination to help determine when you will buy and when you will sell. These tips, tricks and tactics are all important to know in order to be successful with forex trading. The more you know about the forex trading markets and options, the better you will be able to handle your trading and get the results you want.

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