WEBVTT 00:02.260 --> 00:08.530 In this video, we'll take a look at the moving average convergence, divergence or McGeady indicator. 00:09.070 --> 00:11.370 First thing we'll do is we'll put that on the chart. 00:11.380 --> 00:18.790 So let's go ahead and click on indicators, type in erm a CD and it'll come up, make sure to click 00:18.790 --> 00:27.040 McGeady and not McGeady strategy and you can see it opens up a separate window underneath and there 00:27.040 --> 00:29.260 is a histogram and a couple of moving averages. 00:29.260 --> 00:35.380 The histogram measured for the spread between the moving averages and whether or not the moving averages 00:35.380 --> 00:36.790 are rising and falling. 00:36.820 --> 00:40.720 So two moving averages if you plotted them on the chart. 00:42.820 --> 00:49.870 And the parameters that are the standard parameters, they would look exactly the same, it's just basically 00:50.350 --> 00:53.390 a way of measuring momentum in its own little window. 00:53.890 --> 00:56.230 So how do we use this? 00:56.260 --> 01:00.280 Well, there are a multitude of ways that people use McGeady. 01:00.280 --> 01:05.470 The first is the zero signal line cross here, so. 01:07.140 --> 01:11.640 You can see there's a measurement from a thousand to a thousand now, this will adjust depending on, 01:11.760 --> 01:16.460 you know, the range of of the instrument. 01:16.470 --> 01:19.460 But in this case, in Bitcoin, it's 8000 to negative thousand. 01:19.830 --> 01:24.100 And every time it crosses the zero line, traders will either be buyers or sellers. 01:24.900 --> 01:29.340 That's probably the most straightforward and easiest way to trade mcgeady. 01:30.300 --> 01:35.280 Some people will use Crossover's as a signal to get involved. 01:36.670 --> 01:42.790 You can see that the the moving averages do cross over occasionally, so like a moving average crossover 01:42.790 --> 01:47.770 system, the problem you have with this and it's going to be the same with an actual moving average 01:47.770 --> 01:51.690 crossover system, is that in a flat market you get a lot of false signals. 01:51.700 --> 01:56.500 So like this market was going sideways and you got chopped up, you eventually did get some profit, 01:57.400 --> 02:00.430 but you took a couple of unnecessary losses in that meantime. 02:00.430 --> 02:00.790 So. 02:03.430 --> 02:09.610 A way to filter that out is typically to aim for high or low crossover's, ignore these ones, but try 02:09.610 --> 02:11.140 to find the ones that are much higher. 02:12.620 --> 02:20.030 And then some people will use it as a divergence, so oscillators and this is one of the family of indicators 02:20.030 --> 02:27.230 and oscillator, sometimes what you'll see is prices moving higher, but yet the indicators on the oscillator 02:27.230 --> 02:27.980 are not. 02:28.550 --> 02:37.550 And what that tells you is that perhaps the underlying momentum is waning and that is a sign of internal 02:37.580 --> 02:38.320 weakness. 02:38.840 --> 02:41.140 People will sometimes use the moving averages. 02:42.440 --> 02:44.420 Sometimes they'll use the histogram. 02:47.130 --> 02:54.390 It really comes down to, you know, how quickly you want it to happen, more often than not, though, 02:54.390 --> 02:57.020 you will see the histogram used. 02:57.420 --> 02:59.070 So I've got three assets. 02:59.070 --> 03:04.410 I've got Bitcoin, Canadian dollar, Japanese yen, currency pair and U.S. Steel. 03:04.890 --> 03:09.480 Let's go ahead and walk through these and see if there are some, you know, ways we could have used 03:09.480 --> 03:10.590 Makdisi to help us. 03:11.930 --> 03:15.740 The most obvious place on this chart is right around here. 03:16.700 --> 03:23.450 We had seen a moving average crossover at an extremely high level, and this, of course, was the highest 03:23.450 --> 03:29.030 of Bitcoin, so not a huge surprise to see that it failed at that level. 03:29.030 --> 03:36.500 It gotten way overextended and, you know, up to about 14000. 03:36.500 --> 03:38.470 And we have rolled over a bit since then. 03:38.480 --> 03:40.490 You can see there was another crossover here. 03:41.240 --> 03:43.100 There is a bullish crossover here. 03:43.100 --> 03:46.870 But notice how the market itself was relatively flat. 03:47.510 --> 03:49.880 So probably not the greatest signal. 03:51.910 --> 03:59.200 You can see here, same thing, a Polish crossover, you know, we started swinging up, but the market 03:59.200 --> 04:01.080 was drifting a little bit lower. 04:01.090 --> 04:02.710 It was just kind of lackluster. 04:03.430 --> 04:08.050 Part of the filter can also be how wide the histogram is. 04:08.050 --> 04:09.990 You know, you want to see a wider histogram. 04:10.000 --> 04:17.920 It makes more sense that it may give you because it shows a greater diverging of the two moving averages, 04:17.920 --> 04:20.860 that there's more strength, if you will, in whichever direction. 04:23.350 --> 04:23.980 The. 04:25.650 --> 04:32.790 Zero line crossover right here would have been an excellent buying signal, for example, as well, 04:33.900 --> 04:38.130 but with Licorne, let's take a look at the four hour chart and you can see it works on smaller time 04:38.130 --> 04:39.100 frames as well. 04:39.600 --> 04:41.660 There's your moving average crossover. 04:42.240 --> 04:42.960 And we did. 04:42.960 --> 04:46.080 In fact, drop wasn't a huge move, but it did move. 04:46.380 --> 04:54.330 Moving average crossover right here led to the market picking up quite a bit until, you know, probably 04:54.330 --> 04:57.330 right about here where you would have got a cross signal. 04:57.840 --> 05:03.630 So that, of course, set up quite nicely for a potential run. 05:04.260 --> 05:09.870 And as a result, it looks as if this has been steady along the way. 05:10.170 --> 05:16.710 In the next video, I'll take a look at understanding stock placements and signs of momentum loss.