Introduction to the Best MACD Final Indicator
Oscillators are a classification of indicators which many traders use as an additional level of confirmation regarding the direction of the trend or momentum.
The MACD is one of the most popular types of oscillators, and the OsMA is an oscillator which is often derived from the MACD. This indicator is a combination of both the MACD and the OsMA.
What is the Best MACD Final Indicator?
The Best MACD Final Indicator is an oscillator type of indicator which is a modified version of the Moving Average Convergence and Divergence (MACD) indicator. It is in fact a combination of the classic MACD indicator and the Oscillator Moving Average (OsMA) indicator.
This indicator plots two oscillating lines, the green line being the MACD line and the red line being the signal line.
It also plots histogram bars which represents the OsMA component of the indicator. It plots green bars indicating bullish momentum, red bars indicating bearish momentum, and yellow bars indicating a weak momentum direction. Positive bars indicate a bullish trend, while negative bars indicate a bearish trend.
How the Best MACD Final Indicator Works?
The MACD and OsMA indicators work well together. This is because the OsMA indicator is often preset as the difference between the MACD line and the signal line.
This version of the MACD also uses Exponential Moving Averages on all its components. This includes its two underlying moving average lines used to compute for the MACD line, as well as the signal line.
How to use the Best MACD Final Indicator for MT4
This indicator has several variables which can be modified all of which control its MACD and OsMA components. Traders can tweak these variables in order to adjust the sensitivity of this indicator.
There are several ways to use the MACD indicator and the OsMA indicator individually. However, since this indicator is a combination of both, traders can use the confluence of trend reversal and momentum reversal signals indicated by these two oscillator components. Traders could use the crossover of the MACD line and signal line in confluence with the crossing of the OsMA line above or below zero.
Buy Trade Setup
When to Enter?
Open a buy order on the confluence of a MACD line crossing above the signal line, the OsMA bars crossing above zero, and a recent bullish momentum candle. Set the stop loss on the support below the entry candle.
When to Exit?
Close the trade as soon as the MACD line crosses below the signal line.
Sell Trade Setup
When to Enter?
Open a sell order on the confluence of a MACD line crossing below the signal line, the OsMA bars crossing below zero, and a recent bearish momentum candle. Set the stop loss on the resistance above the entry candle.
When to Exit?
Close the trade as soon as the MACD line crosses above the signal line.
Conclusion
This indicator does have the potential to produce trades with decent yields. However, it is not accurate when used in a choppy market condition. So, it should not be followed blindly as the only basis for opening and closing trades. However, it does work well when used in confluence with other trade setups.
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