MACD Histogram
The method focuses on the MACD histogram, a widely used technical indicator for tracking market trends. It particularly emphasizes signals that indicate a potential crossover when the MACD signal line reaches a specific level.
The MACD histogram, an abbreviation for Moving Average Convergence Divergence histogram, is a favored instrument among traders for detecting possible buy and sell signals in a stock's price chart. It is generated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA, creating a line that fluctuates above and beneath a zero line. A bullish signal is identified when the MACD line moves above the signal line (a 9-period EMA of the MACD), while crossing below signifies a bearish signal.
By depicting the difference between the MACD line and the signal line as bars above and below the zero line, the MACD histogram advances this evaluation. This visualization aids in recognizing momentum shifts and verifying trend reversals.
Applying the Technique
Conditions for Buy Method
A buy order is permitted when the MACD histogram rises above the zero line.
Standard limitations like buying once or selling once do not apply to this strategy: each time the purchase conditions are met, Gunbot will place a buy order up to the limit set in your balance settings.
Conditions for Sell Method
A sell order is allowed when the MACD histogram falls below 0.
Using gain protection in this strategy is optional. Keep in mind that this might result in sell orders below your break-even point.
Trading Example
Example of how trading with this strategy can be effective. Specifics and configurations
The infographic below illustrates what activates trades using this strategy.
