Binary Options Trading Using Exponential Moving Average MACD And Parabolic SAR
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MACD is one of the most reliable indicators. Although we do not believe in using indicators in our own trading and we always use the price candlestick chart to find the trade setups, we look at MACD direction when we find a signal on the price chart. So we use MACD to confirm the trade setups, and it really works for us. There are so many professional traders (both stock and forex traders) who rely on this indicator. Of course, we should not exaggerate about it. It is not a magic tool to show you the buy/sell signals. But we can say that it is a great indicator compared to the others.
Why MACD works?
That is a million dollar question. Before we answer this question that why MACD works, we prefer to explain about one of the most important reasons of forex traders’ (and also all other kind of traders’) failure. Maybe you have heard this a lot from us but it has to be reminded in this article too. Lack of patience is one of the most important reasons of forex traders’ failure. Most traders are not patient enough to wait for a good trade setup. After several minutes, hours or days that they wait for a signal (depend on the time frame or system they use), and they can not find any signal, they lose their patience and force themselves to take a position while there is no sharp and clear trade setup. So they lose. On the other hand, when they succeed to take a good position, they get out too early with a small profit because they are afraid of losing the profit they have already made. They do not have enough patience to hold a position until it hits the target. So they make their profit limited because of lack of patience. MACD is a solution for this problem, because it is so delayed and this delay forces you to wait more, both when you are waiting for a trade setup, and when you have a position. That’s why MACD is recommended both by forex and stock traders.