MACD indicator is among one of the best method used to determine how and when to purchase binary options trades. The term MACD stands for Moving Average Convergence and Divergence. The Moving average Convergence and Divergence chart differs considerable from the Bollinger band indicator because it does not contain lower, middle and upper bands; instead it deploys two bands that when plotted on a chart often crosses both below and above each other. It is becoming by far the most popular indicator in existence today.
Here is how it works; Moving Average Convergence and Divergence (MACD) is used to identify changes in the duration, strength, momentum and direction of a current trend in an investment asset price.
The Moving Average Convergence and Divergence line is usually charted by using the difference between twenty six day and twelve day exponential moving average- the most current data is given more relevance than past data- of closing price. Then a plotted line of a nine day simple moving average usually called “the single line” is added to identify potential sell and buy instances.