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TradingSolutions Function Library
MACD Signal Line [MACDSignal] 

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The MACD Signal Line function calculates the signal line for the MACD (Moving Average Convergence/Divergence), which is the difference between a short and a long term moving average for a field. The signal line is a moving average of the MACD used for generating entry/exit signals.
Parameters  Data The data to use in the calculation. This is typically a field in a data series or a calculated value.
The period of the moving average used in the MACD Signal Line are fixed by definition. To experiment with variations of the MACD Signal Line, try creating moving averages of the MACD.
Function Value  The MACD Signal Line is a 9day exponential moving average of the MACD (Moving Average Convergence/Divergence). The MACD is calculated by subtracting the value of a 26day exponential moving average from the value of a 12day exponential moving average.
The value of the MACD at the beginning of a data series is considered to be zero. Similarly, the MACD Signal Line at the beginning of a data series is considered to be zero. Since both the MACD and the MACD Signal Line use exponential moving averages, their initial values will include these zero values in their calculation. Therefore, you may want to ignore values before the 34th value, when the effect on the signal line moving average on the longer MACD moving average is no longer significant.
Usage  The MACD is traditionally traded against a 9day exponential average of its value, called its signal line. When the MACD increases above its signal line, a buy signal is generated. When the MACD decreases below its signal line, a sell signal is generated. See the sample entry/exit systems for examples using the MACD.
The MACD is a specific instance of a Value Oscillator and is typically used on the closing price of a security to detect price trends. When the MACD is increasing, prices are trending higher. When the MACD is decreasing, prices are trending lower.
See the sample entry/exit systems for an example of using the MACD Signal Line in an entry/exit system.
Source  This indicator is based on entries in "Technical Analysis From A To Z" by Steven B. Achelis. It was originally developed by Gerald Appel.



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