Define: Moving Average Convergence Divergence

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Definition: Moving Average Convergence Divergence


Quick Summary of Moving Average Convergence Divergence


A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.



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Full Definition of Moving Average Convergence Divergence


Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices.

MACD Formula

The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

A fast EMA responds more quickly than a slow EMA to recent changes in a stock’s price. By comparing EMAs of different periods, the MACD series can indicate changes in the trend of a stock.

The typical MACD trading rule is to sell when the MACD falls below its signal line and to buy when the MACD rises above its signal line.

MACD takes three inputs: the fast moving average period, slow-moving average period, and a moving average period for the signal line.


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Synonyms For Moving Average Convergence Divergence


MACD


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Definition Sources


Definitions for Moving Average Convergence Divergence are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 25th March, 2020