The Forexoma-MACD is a modified indicator designed for the Metatrader 4 platform which is based on the MACD technical indicator. It was designed to be easier to read for the trader, as standard MACD signals can be somewhat complex for the beginner trader. In addition, it is designed to detect trend changes earlier as we will see later. It is a color-coded indicator which changes its color as soon as the analyzed asset changes trend.
This allows traders to detect the market trend much earlier than they could with the conventional MACD on the MT4 platform. The Forexoma-MACD actually works as a histogram whose bars change their color according to the current trend. Using the conventional MACD indicator on some occasions can cause traders to open their positions in the market when most of the price momentum is diminishing. This causes the trader to lose valuable pips of profit that could be obtained if he opens his positions earlier.
Parameters of the Forexorama-MACD indicator
As for the Forexoma-MACD parameters, they are the same as those used by the conventional MACD, which means that the trader will have no problems when configuring it.
Example of the indicator on a price chart
In the image above we see an H1 price chart of the EUR/USD currency pair in which the Forexoma-MACD indicator was included (lower window below the price chart). As we can see, the bars of the histogram change color according to the direction of the market. The vertical red lines show trend changes that coincide with changes in the Forexoma-MACD coloration. In the first case, the market goes from being in a period of lateral movement to a strongly bearish trend, in which all the bars of the histogram are red. In the second vertical line, the price trend changes from bearish to bullish, as shown by the Forexoma-MACD, whose bars change from red to purple and begin to rise until crossing the zero line, which clearly indicates how the market has changed its trend
As with any other technical indicator, the Forexoma-MACD also produces false signals and should be used in conjunction with other market analysis tools and indicators to improve the reliability of the signals.
For example, in the following trading system the MACD is combined with moving averages and the Momentum indicator (here we can replace the classic MACD with the Forexorama-MACD): Trading system based on MACD and Moving Averages
You can download this indicator at no cost at the following link: Forexoma-MACD Indicator for MT4