MACD-Suitable Stocks by Kevin Luo
Trading signals generated by the crossover of Gerald Appel’s moving average convergence/divergence and signal lines are popular and simple to use. Do they work for all stocks in all market conditions? Find out here.
The moving average convergence/divergence (MACD) signal line crossover is a popular technical indicator used by many traders and investors. The MACD was developed by Gerald Appel in the 1960s and is readily found in trading platforms of all types. It generates trading signals upon crossovers of its MACD and signal lines. The method is considered simple to use; however, many have doubts about how effective the method is. To find out whether the technique works, I conducted a backtest on a large portfolio of stocks traded on the major exchanges. The results of the backtest will help determine the level of effectiveness of the MACD method.
HERE'S WHAT I FOUND
In the study, I selected approximately one third or 1,816 stocks traded on the NYSE and NASDAQ for the backtest. These stocks met the following selection criteria: