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MACD Signal Line calculation

Discussion in 'Stock Market Nuts and Bolts' started by Beams, Nov 25, 2010.

  1. Beams

    Beams

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    Hi,

    The signal line (9 days) is the 9 day EMA of MACD

    How do work out the EMA of a MACD when EMA involves closing price, and MACD does not? (Formula is from shockcharts.com)

    I found Signal Line = MACD * Multiplier + SMA[of 9 days] * (1-Multiplier), is this correct?

    I m just starting out and trying to get my head about some of the calculations, I understand there not elemental, I would like to understand how they work before I rely on them.
     
  2. tech/a

    tech/a No Ordinary Duck

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    You can calculate an exponential moving average of any data set it doesn't need to be close.
    MACD is simply the Convergence / Divergence of any 2 M/A's and the Trigger line is an M/A of that---the Moving average Divergence / Convergence.

    As for relying on it as a signal all it is is another average expression it tells you how data has represented it self of the past X periods.Tells very little about how its going to perform going forward.
    Like all indicators used in isolation is no better than a 50/50 punt.
     
  3. Beams

    Beams

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    Cheers,

    Turns out I had a different EMA equation (which produced the same results). Got it now :)
     
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