What is MACD?

What it means

The standard construction subtracts a 26-period EMA from a 12-period one and then plots a 9-period EMA of that difference as the signal line. The histogram is simply the gap between the two, which makes MACD an indicator built entirely from other indicators.

Why it matters

That construction is also its main weakness. Every layer adds lag, so a MACD crossover confirms a move that a plain moving average already confirmed, later. Divergence between MACD and price is the more interesting reading, though it is notoriously prone to appearing repeatedly before a trend actually ends.

What this changes in practice

Our engine does not use MACD. That is not a criticism of the indicator so much as a consequence of the timeframes we trade — on M1 to M15 gold, an indicator built from 26-period averages is describing conditions that have already changed by the time it updates.