The MACD: The Perfect All In One Indicator?

Expert traders are fast to let you know that combining two indicators will inevitably give you better and more reliable signals on when to enter or exit an open position. Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship in the movement of the price of a security. It combines two indicators ; a 12-day exponential moving average for the short-term changes and a 26-day exponential moving average for the long-term changes. The MACD was invented by Gerald Appel in the 1970s, where his intention was to create an indicator that will reveal, direction, momentum, strength, and length of a stock's trend. This makes it unique compared to other indicators, as it's really an "all in one" indicator. The MACD Formula The calculation of MACD is done by taking the 26- period exponential moving average (EMA) and then minus 12-period EMA. This gives a 9 day EMA of the MACD referred to as the signal line. When the 12-