Scalping Trading Top 5 Strategies: Making Money With: The Ultimate Guide to Fast Trading in Forex and Options

Chapter 4: MACD Indicator
The Moving Average Convergence Divergence (MACD) Indicator
strategy has the ability to produce over 80% in winning trades if used
correctly. The MACD indicator is an incredibly easy one to master, and
can be a wonderful tool in scalping. Many traders fail to recognize the
benefit of this indicator, so it is often overlooked in trading programs. For
those who become fluent in it, they consider it to be one of the most
reliable of all existing indicators, if used properly. This section will discuss
its purpose and how to use it to maximize your profits.
The MACD indicator was originally developed by Gerald Appel. The
indicator consists of two moving averages and a histogram. The averages
are deciphered with two different colors: blue to represent the short period
average, and red to represent the long period average. The histogram, or
the blue bars seen beneath the averages, symbolize the difference between
the two averages. The histogram “zero” level is the most important, as it
helps indicate a neutral market. From there, we will determine whether the
market is on an uptrend or downtrend. When the histogram is above zero
level and continuing to incline, the market is on an uptrend. However,

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when it is below zero, and continuing to decline, the market is on a
downtrend.
The histogram is the most important aspect of the MACD indicator. This is
the portion we will monitor as our first clue for when the market is in a
good position for us to enter. It is important you learn how to monitor the
histogram, as it will be critical in your success using this strategy.
Mastering this indicator can maximize your scalping profits.
Indicators Used:
As you may have already guessed, you will be using the Moving Average
Convergence Divergence (MACD) indicator for this scalping method. This
indicator will be your initial determining factor for making decisions in
your trading procedures. Additionally, you will be using the Slow
Stochastic indicator. The Slow Stochastic indicator has two important
levels that will help you confirm your exact entry points. These levels are
80 and 20. Level 80 translates to a market that is overbought, whereas 20
represents a market that has been oversold. Once your MACD histogram
expresses your desired trend, you will want to keep a close eye on the
Slow Stochastic indicator to finalize your decisions. Typically, when the
Stochastic indicator reaches level 80, it will start to decline again, rapidly.
Alternatively, when the indicator plummets to level 20, we will likely see

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it spike back upward again fairly quickly.