MACD
Two averages, their gap, and the gap's own average.
Build the MACD line, the signal line and the histogram from a column of closes, and say what each one subtracts from what. Explain why MACD is quoted in price points and cannot be compared across instruments, why the histogram shrinks while price is still rising, and read a MACD divergence as a record of a change in pace rather than a forecast of a turn.
5 chapters · 6 quiz questions · 10 terms · included with a plan
Otus, on this module
MACD looks like the most sophisticated thing on a retail chart: three lines, a zero line, bars changing colour. Underneath it is two averages of the closes and a subtraction. Once you can say which subtraction each line is, the "signals" stop looking like signals and start looking like what they are — a description of pace, arriving a little late.
The chapters
Each module ends with you doing what it taught — a written answer Otus reads, and a quiz.
- 01 · Read
Two averages and a gap
The MACD line is the fast average minus the slow one. Worked from the closes.
- 02 · Read
The histogram is a difference of a difference
Why it shrinks while price is still climbing, and what a signal-line cross is.
- 03 · Read
MACD divergence
A higher high with a lower MACD — the same idea as RSI divergence, in points.
- 04 · Watch
Watch: MACD
One minute, then the step ticks itself.
- 05 · Write
In your own words
Two or three sentences. Otus reads them.
- 06 · Quiz
Six questions
A wrong answer still pays. It costs the combo, not the XP.
10 terms this module defines
The same definitions Otus uses in the lessons. All of them are in the trading glossary.
- MACD
- Moving Average Convergence Divergence: a family of three lines built from two exponential averages of the closes, usually 12 and 26 periods, and a 9-period average of their gap.
- MACD line
- The 12-period EMA of the closes minus the 26-period EMA. How far the fast average is ahead of the slow one, in price points — a measure of recent pace, not of level.
- Signal line
- A 9-period EMA of the MACD line. An average of the gap between two averages, which is why it trails the MACD line and moves more slowly.
- MACD histogram
- The MACD line minus the signal line. Whether the gap between the averages is widening faster or slower than its own recent average — a difference of a difference.
- 12/26/9
- The standard MACD settings: fast EMA, slow EMA, signal EMA. A default, not a law — a MACD on other settings is a different number, so a reading needs its settings to mean anything.
- Price units
- MACD is a difference of two prices, so it is quoted in the instrument's own points. It cannot be compared across instruments, or across years when price was far lower.
- Zero-line cross
- The MACD line crossing zero, which is the 12-period EMA crossing the 26-period EMA — a moving-average crossover in different clothes, with the same lag.
- Signal-line cross
- The MACD line crossing its signal line, which is the histogram crossing zero. Three layers of averaging from the closes, so always late, and frequent in sideways markets.
- MACD divergence
- Price makes a higher high while the MACD line makes a lower one, or the mirror at lows. A record that the later push had less recent pace behind it, not a forecast of a turn.
- Pace versus direction
- A market can keep moving the same way while moving more slowly. Momentum indicators measure the pace; only the price structure says whether the direction has changed.
Finishing it pays 150 XP and 3 keys on the game board, on top of what each chapter earns. XP measures what you learned — never what you earned. How levels work.
Education only. Nothing here is a recommendation to buy or sell anything; the school teaches reading charts, never predictions.
Start with lesson one.
The first modules, Otus as your tutor and the game board are free. No card needed.