MACD — what it is and how to use it in trading
Definition
MACD (Moving Average Convergence Divergence) is the difference between a fast and a slow EMA (the MACD line) plus its own smoothing (the signal line). A crossover of the MACD line and the signal line is one of the most recognizable entry signals in trend-following strategies.
How it works in the builder
The macd operand takes fast, slow, and signal parameters (default 12/26/9). Beyond the MACD line itself, the builder offers related operands (PPO — a percentage version; the histogram is expressed as the difference between MACD and the signal line inside a condition).
What it looks like on the chart
Drawn as a separate panel: the MACD line, the signal line, and a histogram of their difference. The line crossover is usually the signal point.
Typical use
Typical condition: macd crossed_above signal — momentum has flipped in favor of buyers.
Common pitfalls
MACD is built on EMAs, so it lags price — on a ranging market the lines cross often with little predictive value ("whipsaw"). It works better in trending conditions than in a flat range.
This block is available in the strategy builder
137 no-code blocks — build an entry condition with this term and test it on history
Historical results do not guarantee future ones. The service is an informational and analytical tool, not an individual investment recommendation; trades are not executed.