So today we're going to be talking about the MACD indicator and how you can use it for day trading and swing trading within the stock market. The MACD is by far one of the most undervalued indicators, and in my experience, it makes it a lot easier to understand what's going on day to day as as well as intraday. As always, the only thing that I asked for in return is that you hit that like button and also subscribe for more short sweet simplified videos on how to trade the stock market. Ok, so let's go ahead and start from the bottom.

So MACD stands for the moving average Convergence divergence which sounds complicated, but it's really not. So let's start by labeling everything and then I'll discuss what each does. The blue line is the MACD line, the yellow line is the signal line, and the bars are the momentum indicators. The higher the green bar, the more positive momentum, the lower the red bar, the more negative momentum.

Ok, so now for the fun part. So when the blue line crosses over the yellow, that's a bullish sign. Likewise, when the blue crosses below the yellow line, that's a sign of a downward trend. And if you haven't already gotten out of your position, it's time to consider getting out, because if you stay in any longer, you'd be better off begging outside.

7-eleven The positive momentum line, which is in purple. This is a sign that we are still in positive momentum territory, which is to say that a minor push back to the line isn't likely to produce a reversal unless it dips below it. As you know, when most stocks for an up, they tend to have small push backs here and there, and that's why this line is in existence. It pretty much measures the acceptable range of a push back before it is considered a sign.

any longer. Reversal: Ok, woohoo, you now know what each part of the MACD does. if you don't, just you know, rewind 20 seconds and then you can go over it one more time before we get into the examples. So now it's time to go over some examples so we can really hit this in.

Okay, here's a real life scenario. Let's say it's early August and you're looking to take a swing position in Tesla. You see that there was a pretty good run-up for the first few days, but you're also anxious to take your position so that you can cash out your account and buy your gram of that new mechanical hip so that you could be the talk of the town. Now, if you take the position without consulting the MACD indicators, you're likely to miss some early signs of a reversal.

If you look at the lines, you can see that blue MACD line crossing below the signal line. not once, not once, but twice. which if you remember from earlier, is a sign of a downward reversal. Of course.

Afterwards, we saw a continued sell-off. As you could see when the price traversed, we saw the blue MACD line cross over the signal line what's more in the early stages and then continued to bounce up. Okay, so the next example I'm going to give you is with C Bat. C Pad has been trading higher so far this year, but let's take a look for some of their early indications of this on the MACD.

So if you look at the very bottom of the reversal, you could see the blue MACD line crossing over the yellow signal line. And then that's when we started seeing positive momentum. This was a sign of an upward reversal and would have made a great place to take a position. Now, obviously it's easy to say this afterwards, but it's key to use the indicator with understanding of the other indicators such as the RSI, the SMA line and an understanding of support and resistance.

An example of how I would use the MACD with the other indicators as well. So so let's check out the downward reversal on this. Now, the slide of the reversal here was once again when the blue MACD line crossed over the yellow signal line, but you could also have used this in conjunction with your other indicators as you can see the price action dipped below the SMA line even before the MACD had chills of a reversal and the RSI had showed that the stock was oversold for quite some time. So what I'm getting at here is that when you're looking at a downward reversal, the RSI is often going to be the one to give you that first sign, then the SMA and then last the MACD.

So when it comes to getting out of your position, you can kind of think of it as like a frustrated girlfriend who for the first time you don't do something that she once asks you nicely, then the second time raises her voice and then all of a sudden she starts yelling. This is a good analogy because if you think of the RSI indicator, the harness is kind of like the frustrated girlfriend who's like hi, consider getting out because the price is oversold. The SMA line is kind of like oh, you should get out now you should get out and then the MACD is kind of like get out of the position you dog. Now, based on your style of trading, you are probably going to focus most on one indicator, but it's essential to note each of them when entering and exiting your positions.

For me, I focus on the RSI because I like to buy in when it's oversold and then hold until resistance. That being said, if the stock fails to meet resistance and we see signs of a reversal on the MACD that I'm going to want to exit my position. Likewise, when we see signs of an upper reversal on the MACD and some confirmation on the S, I'm going to feel a lot more comfortable taking a position anyways. guys.

I Hope this video was helpful. A quick note for those of you who are still tuned in when it comes to trading, you need to manage your risk, learn as much as you can, and don't expect to love it every day. There's always going to be your up-and-down days, but in the long run, it's all about taking consistent efforts to become a better trader and investor. And that's really true with any sort of thing that you're doing in life with consistent effort.

It may not seem like much now, but even if you spent only an hour a day, you could learn a lot about trading and pretty much anything if you could just consistently did it within the span of a few months. But anyways. I Hope this video was helpful and don't forget to hit that like button and also subscribe for more short sweet simplified videos on how to trade the stock market. Have a great day folks and I'll see you in the next video.