Inexperienced traders may wonder what this MACD stock is they're always hearing about. But despite looking like a stock ticker, MACD is an acronym for the moving average convergence divergence, one of the most commonly used momentum indicators in technical analysis.
Since day and swing traders rely on price data and not fundamentals, using tools like the MACD indicator is a must to predict future price movement as accurately as possible.
But technical analysis isn’t a gateway to foolproof stock picks. Traders using technical tools understand that no system will have a 100% hit rate, and the goal is simply to minimize losses while maximizing gains. That's why you often hear day traders use the same terminology and rules as professional sports bettors: keeping position sizes small, rolling with the winners and never trading when emotions run high.
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