Custom indicators · MACD strategy · DIF crossing the zero axis 1、 The core principle of MACD MACD is known as the "king of indicators" in the investment market and has always been the most valued indicator in the investment market. Among many well-known market platforms such as AiCoin, MACD has always been the default display indicator. It is a trend tracking technical indicator based on moving averages, whose core is to use the difference between short-term and long-term moving averages to measure market momentum changes, while further smoothing to eliminate interference and identify trend signals. MACD can balance market trends and volatile market conditions, making it a very important and widely used tool in technical analysis. 1. Components: Basic composition of MACD The MACD indicator consists of three parts, each conveying different information: DIF (Fast Line): DIF is the difference between short-term EMA and long-term EMA, directly reflecting changes in market momentum. When DIF rises, market momentum increases, and when it falls, market momentum weakens. DIF is the core calculation line of MACD. DEA (Slow Line): DEA further smooths the DIF (usually the 9-day EMA of DIF) to filter out some market volatility interference, making the trend signal more intuitive and clear. Bar chart: The bar chart represents the difference between DIF and DEA, which can be used to visually display the strength of market momentum changes. An increase in the bar chart indicates an increase in momentum, while a decrease in the bar chart indicates a decrease in momentum. 2. Basic principle: How MACD works MACD is based on the dynamic relationship between short-term EMA (such as 12 days) and long-term EMA (such as 26 days), gradually smoothing and quantifying market momentum changes, mainly reflected in the following three aspects: Zero axis and long short transformation: The fluctuations of DIF and DEA on the zero axis serve as the boundary between long and short positions. Crossing the zero axis usually indicates a significant turning point in market trends, marking the alternation of long and short forces. Cross signal: When the fast line DIF crosses the slow line DEA, it indicates that market momentum is beginning to increase, which is a buy signal; On the contrary, when the fast line crosses the slow line, it indicates a weakened market momentum and is a sell signal. Bar chart changes: The growth and contraction of the bar chart reflect the strength and weakness of market momentum, which helps traders quickly judge whether the trend continues or weakens. 3. Characteristic advantage: Scope of application of MACD MACD, as a tool for tracking market trends and measuring momentum, has the following characteristics: Trend sensitivity: The interaction between DIF and DEA is suitable for capturing important turning points in trend markets, such as the beginning, end, or acceleration of trends. Applicability of volatile market conditions: MACD bar charts can dynamically reflect the increase or decrease of market momentum, which helps to identify false breakthroughs or trend reversals in range volatile market conditions. Signal intuitiveness: Through the changes of the zero axis, intersection points, and bar chart, MACD can visually convey market momentum and provide reference for trading decisions. 4. Application scenario: Actual use of MACD MACD is widely used in various trading scenarios, providing traders with clear judgments and entry and exit criteria: Trend tracking: MACD's fast and slow line crossings, as well as zero axis crossings, are commonly used to identify buying and selling signals in trend markets. For example, buy when DIF crosses DEA and sell when it crosses DEA. Trend intensity measurement: The size of the bar chart indicates the strength of the momentum of the trend, and when the bar chart expands with the rise of prices, the momentum is strong; As prices decrease and shrink, momentum weakens. Deviation signal recognition: When the market price deviates from the trend of the MACD indicator (such as when the price reaches a new high but the MACD does not), it usually means that the trend may have reversed. 5. Technical Logic: Characteristics of MACD Construction Compared with other technical indicators, the calculation logic of MACD achieves momentum quantification and trend filtering through dual smoothing: Eliminating market noise: EMA reduces the impact of short-term volatility by calculating the closing price, allowing traders to focus on the main market trends. The double-layer filter of momentum: the fast DIF captures short-term momentum changes, while the slow DEA smoothes the fast DEA to improve signal accuracy. Suitable for multiple markets: Whether it is the stock, futures, forex, or cryptocurrency markets, MACD can effectively achieve trend and momentum analysis.