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There could be technical indicators for which you can choose, enhancing the quality of your decision-making process in trading. Perhaps the most simple amongst them is the MACD, or Moving Average Convergence Divergence—a rather useful indicator to find out momentum and trend direction as well as possible reversals by comparison of moving averages between short- and long-term orientations.

The MACD consists of three lines: the MACD line, the signal line, and the histogram. A method as simple as looking for crossover points between the MACD line and the signal line as entry and exit points is a staple. There is a lesser-known method that is based on the divergence of the MACD line to price action.

The bottom line is that no indicator can guarantee success in its own right; however, the transparency offered by the MACD makes it one of the favorite indicators found in use among traders. Unlike other indicators, such as the Relative Strength Index (RSI) or even Bollinger Bands, fine-tuning your trading strategy might then be the cause of more effective decisions and trading outcomes.

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