Regardless of the method used to attach the MACD to a price chart, a MACD window will appear. This window has four different tabs that allow traders to customize the appearance and function of the indicator:
- Fast EMA - the length of the fast (short) EMA. By default, this is set to 12.
- Slow EMA - the length of the slow (long) EMA. By default, this is set to 26.
- MACD SMA - the length of the signal line. By default, this is set to 9.
- Apply to - the price that will be used in calculations. By default, this is set to the Close price.
- Fixed Minimum and Fixed Maximum - to set minimum or maximum values for scaling the indicator.
Figure 7: Traders can customize the moving average lengths and specify the price on which to base calculations.
The Colors tab, shown in Figure 8, is where traders can specify the color, line style and line thickness for the different parts of the MACD:
- Main - the histogram
- Signal - the moving average that appears on top of the histogram
Figure 8: Adjust the MACD\'s appearance in the Colors tab.
The Levels tab, shown in Figure 9, is used to enter specifications to draw a channel around the zero line. This can help traders identify certain buy and sell signals, based on their own preferences.
Figure 9: Traders can draw a channel around the zero line by entering specs in the Levels tab.
To add Levels, click the Add button. Enter a numeric value and description for the first level, and click the Add button to create additional levels. In Figure 10, an upper value of 0.008 and a lower value of -0.008 were specified. The chart shows the channel in yellow; the channel can be used to represent thresholds by which traders can make trading decisions.
SEE: MACD Histogram Helps Determine Trend Changes
Figure 10: Traders can add a threshold channel (shown here in yellow) to the MACD to help identify overbought and oversold conditions.
Finally, the Visualization tab, shown in Figure 11, is used to specify the timeframe(s) to which the MACD indicator will be anchored. This can be done so that the indicator's settings (such as color or EMA length) will not have to be readjusted with each new timeframe.
Figure 11: The Visualization tab is where traders can specify to which time frame(s) the MACD will be attached.
For example, if the MACD's Fast EMA is set to 12 in the Parameters tab, certain time frames - such as Daily, H1 (one-hour) and H4 (four-hour) - could be selected in the Visualization tab to specify that these settings will appear only on these three time frames as traders toggle between the various charting intervals. To have the MACD (with the same inputs) appear on all charting intervals, click the box next to "All Timeframes."
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