The MACD is used to help identify changes in the strength, direction, momentum and duration of a trend in a particular market. Trend identification is of great importance to most traders as getting on the right side of a trend can be the easiest way to be profitable in financial markets – as long as proper money and risk management is undertaken. The MACD is a collection of lines which are typically calculated from daily closing prices. First of all there is the horizontal “zero line”. Then we have the MACD line itself which is the difference between a short and longer exponential moving average (EMA). This is the blue line in these examples. The default setting is generally 12 and 26 periods (usually days), although traders can easily customise these if they have a preferred setting. The next default setting is a nine-period EMA of the MACD line, called the Signal line, which is shown in red. This MACD format is known as 26,12,9. The difference (or divergence) between the MACD and Signal lines is shown in the “histogram”. The histogram appears as the black vertical lines in these examples.