#StockMarketHacks
Ready To Start Actually Making Money Investing?
Then you need to learn how to trade the MACD Divergence/Convergence — It’s easy to learn and perfect for new investors starting out.
Understanding MACD convergence divergence (often referred to as the MACD Crossover — although that is a different concept) is an easy, useful, and consistent trading strategy to learn.
I’ve found it to be especially helpful for new traders just starting, as well as Swing Traders.
When the price makes a lower low, while at the same time the MACD is making a higher low — this is referred to as bullish divergence.
Conversely, if the MACD makes a lower high and the price makes a higher high — this would be considered bearish divergence.
It doesn’t matter if you see a Bearish or Bullish set up — both can and will be profitable if you learn how to properly execute the trade.
Well, profitably will also be determined based upon how good you get at spotting if what you’re seeing is an actual MACD Divergence set up and not a fake.
Trust me, it’s very easy to see what you want to see — not what’s actually there.
Fortunately, that’s why I wrote this article.
A quick side note
I’ve seen far too many bad ones out there claiming they have “ the secret “ to using the MACD trading strategies.
Btw. . . There is way more than one MACD strategy, but we’ll address that later.
The truth is, many of them are wrong about how to use this strategy, (and this is of course not financial advice — I’m not a professional, licensed stock trader), so I want to educate people the correct way to use it.
This is real money we’re taking about here. People’s livelihoods are at stake when they read bad information online, so please, be careful. Always verify what you’re reading is correct — do research after you read an article.
Even this one!
Now, let’s get back to it, shall we?
Divergence, either bullish or bearish, almost always happens right after a sharp price movement in the asset you’re charting.
At it’s core, divergence is simply a strong sign that the price might reverse. One way you can add more certainty to the potential reversal is if the move is followed by a Trend-Line Break.
These two events occurring — one confirming the other — are crucial for a MACD swing trading strategy
Understanding what MACD convergence divergence is will greatly enhance a trader’s abilities, and the up the consistency of their winning trades.
I don’t know about you, but I’ve always found the visual learning process much easier. If I have a picture and explanation — generally I’ll be able to understand what I’m seeing.
So, let’s take a look at a Bullish set up, as well as a Bearish one to get a better understanding of what this divergence/convergence looks like on an actual Stock Chart.
Bullish Divergence With Trend Line Break
Notice the MACD in accordance with the price. Also note the Trend Line Break — which is the confirmation that we’re looking for as our entry signal.
Now let’s look at the flip side of the coin.
Bearish Divergence With Trend Line Break
Notice in this chart we essentially have the same thing occurring, except switched around.
This is a textbook bearish MACD Divergence, confirmed by the trend line breaking down.
Always remember, the MACD is mostly used as a momentum indicator. It’s best used in volatile markets, or on an asset trending strongly in one way or another.
I know. . .
That may sound counterintuitive — that the MACD is most useful either in a volatile market or a consistent trend — but that’s just the way it is.
At least, it’s how this strategy has worked for me
A few years ago, when I was first started trading, a very successful investor (who also happened to be a good friend) taught me this strategy.
I tried to the best of my ability to lay this out and teach you this same strategy in the same way he did for me all those years ago.
And I’ll tell you what, if there’s one thing I can say about it, it’s this.
Ever since I learned to identify MACD Divergence Convergence in stock charts, (as well as how to confirm it), well, let’s just say that I’ve yet to be disappointed with the results of this trading strategy.
Conclusion
You can never count on one trading strategy for all of your trades. Even when you see the perfect formation setting up right in front of your eyes, all the stars are lined up and it seems the stock market gods themselves have blessed you with the perfect trade — IT CAN STILL GO WRONG!
This has happened to me more times than I like to count. It’s better to just understand this, accept it, and then move on.
Just take some comfort that knowing these useful strategies will drastically lessen the odds of you losing on your trades. There’s no such thing as a full proof trading strategy.
If someone tells you otherwise, then run!
Here’s A Bonus For You Crypto Maniacs!
I know, I know. . .
Don’t hesitate to reach out!
Sign up for The Self Hack newsletter to have up-to-date & urgent market information sent directly to your inbox so you never miss a trade again!
Always ask questions when you’re uncertain about an investment.
No question is a dumb question — especially when it comes to money!
If you enjoyed this story, brought to you via this wonderful platform called Medium, except you’re limited to only 3 reads per month because you’re not a member, consider signing up.
It’s cheap, awesome, and the value you’ll obtain from the endless access you’ll have to stories available to members only will pay for your membership fee 10 fold!
If you do decide to, consider using my link to do so. I’ll get a small referral fee if you do and it doesn’t cost you anything extra.
Originally published at http://theselfhack.wordpress.com on October 22, 2021.
