How to trade using Moving Average Convergence and Divergence(MACD)

MACD uses two moving averages. They are two Exponential Moving averages. By subtracting longer period MA form shorter period MA we will get a line that oscillates above and below zero called MACD line. 

An increase in gap between the MA's creates a falling MACD and vice verse. The gap between the 2 MA's is the momentum.

MACD comes along with a histogram and it is very easy to interpret. When MACD crossover occurs that is when trend reverses and you can enter in to a position.

 If MACD cross over occurs in the upside plotted in the histogram, you can buy the stock. If it is crossing downward, then you can enter a short position.

Please watch the below mentioned video to understand the trading using this indicator.