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Can I get a detailed explanation of the MACD formula?
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The MetaStock Formula for MACD is:
Mov(C,12,E)Mov(C,26,E)
Note that here we use periods 12 and 26 and not a percentage value.
The formula to calculate the number of periods for an Exponential Moving Average from an exponential average percentage value is as follows:
% = 2 / (t+1)
t = the periods of the EMA
The following is an example of how to solve for “t”, using a value of 10% or 0.1:
0.1 = 2 / (t+1)
0.1 (t+1) = 2
(t+1) = 2 / 0.1 or 20
t = 19
So for 12 we are using :
Percentage=2/(12+1)
Percentage=2/13
Percentage=0.1538461
We round this number to say 15% or 0.15
For 26 we have 0.075
Now let's assume we decompose the MACD formula using these values.
Here is what it would look like:
Our first average is : Mov(C,12,E)
Which is : (C*0.15)+(Prev*(10.15))
(C*.15)+(prev*.85)
Our second average is : Mov(C,26,E)
Which is : (C*0.075)+(prev*(10.075))
(C*.075)+(prev*.925)
MA1:=(C*.15)+(prev*.85);
MA2:=(C*.075)+(prev*.925);
Ma1MA2




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Can I get a detailed explanation of the MACD formula?
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