What is the MACD (Moving Average Convergence / Divergence)

The MACD (Moving Average Convergence / Divergence) - was invented by G. Apple. This indicator is a momentum created by using two moving averages of different speed. The premise of this instrument is that the distance between the faster and the slower mean increases when the trend of the market is well defined, indicating an acceleration of the movement and confirming the strength. Instead this distance would shrink  during deceleration.
When then the market enters a phase of congestion, the continuous junctions between the two averages, that is the difference between the two, becomes very small, passing continuously from positive values ​​to negative values. The MACD is an indicator followed by many analysts, including some analysts at Accendo Markets.
In other words, this indicator is similar to the RSI and other momentum indicators: first of all we must understand if we are in a phase trending or trading.
The MACD represents the difference between an exponential moving average of 26 days and an average exponential up to 12 days ("signal line").
An exponential moving average of nine days, called "trigger line", is used to generate signals of buying or selling, according to the usual rule of the intersection means: when the fastest (the signal line) cuts from the bottom ' high the slower you have a buy signal; when the fastest size from top to bottom the slower you have a sell signal.

Another trading signal is also the crossing of the zero line, obviously in the sense bullish when the MACD returns to a positive values ​and bearish when in a downward direction.
Not being an oscillator, the MACD does not provide fixed areas of "overbought" or "oversold": in each case the levels of the MACD are far from zero. These extensions can detect levels of "overbought" or "oversold "that must be interpreted by the trader.

As with other indicators, the MACD can interpret convergence and divergence. This occurs when  the MACD has an inclination opposite to that of the price chart.
As with other indicators, the importance of the convergence divergence is greater the longer occur at levels of "extreme" from "overbought" or "oversold".
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What is technical analysis?

As well as its focus on active trading, Accendo Markets has a dedicated research team which constantly analyses the markets in order to bring fresh information to its clients. This is achieved through technical analysis, a form of research. This page explains a little about technical analysis, and how it can help you as a retail trader to make the choices that are right for you.

Technical analysis, also known as charting, is the study of the financial markets in order to make educated guesses about the direction different assets may take. This is useful to traders who may need to adjust their plans in order to make the most out of their transactions. It is not without its critics – there are those who believe financial markets are far too unpredictable to study with any degree of accuracy. However, by adhering to certain rules, technical analysts can uncover very helpful information.

There are three basic ‘laws’ of technical analysis. They are:

• Securities are of greater importance than companies.
• Prices tend to follow trends.
• History repeats itself.

Analysts tend to look for patterns in the movement of asset values over given periods of time. As the trade markets tend to move quickly, technical analysis is often used to analyse asset movements over short periods of time, sometimes only a few hours. Analysts refer to charts (which is where the term ‘charting’ comes from) in order to determine how an asset has increased or decreased in value over a period of time. The length of time can be adjusted to meet the needs of the client, and so the system is quite flexible. At Accendo Markets, the focus is on derivatives trading, such as Forex, spread betting and CFDs, meaning timescales are often fairly short and trade turnover is fast. For this reason, technical analysis is an important part of the service they can offer to their clients.

The method has a long history, with some evidence of it being used in Dutch exchanges in the late 1600s. Charles Dow – of Dow Jones – made significant contributions to the practice in the 1920s and 30s, and the charting bible, Technical Analysis of Stock Trends was published in 1948 and written by Robert D. Edwards and John Magee. Some still use it as a guide today.

AccendoMarkets make use of technical analysis to inform all their packages, whether that be for CFDs, spread betting or Forex trading. The ability to deliver up to date, concise information about specified markets is a necessity. Some of the research that is put in to Accendo Markets’ information is reflected in its morning news bulletins that allow its clients to know where they stand at the beginning of each trading day. In this way, technical analysis can be used to reassure and inspire traders to make informed and clear choices about how to trade. 

Fibonacci Retracements

What are they?

Fibonacci retracements are a feature of technical analysis used by stock brokers like Accendo Markets to measure and to predict the movements and trends of stock values. They use Fibonacci sequences to measure the rise and fall of values on a graph, and identify the differences in values at certain key points. Fibonacci retracements are a popular and widely-used form of value measurement, and can even be used to predict future trends.

What are Fibonacci sequences?

Fibonacci sequences are named after the medieval Italian mathematician known by the same name, and are series of numbers where each number is the sum of the two preceding figures. The sequence always starts either 0, 1, 1 or simply 1, 1, after which the next figure would of course be 2, then 3, then 5 and so on. Fibonacci sequences appear everywhere there are patterns, from computing to nature. They are closely related to the golden ratio, so sometimes Fibonacci retracements are referred to as working with the golden ratio. In finance, they are useful because they provide reliable points on a chart at which a technical analyst can plot.

How are they used and why?

A technical analyst will use Fibonacci retracements to analyse a stock’s movements in terms of value over a given period of time. They can mark the highest and lowest point of value on a chart and use this as their 0% and 100% points. They then mark horizontal lines across the chart at the following points, which are determined by Fibonacci sequences: 23.6%, 38.2%, 50%, 61.8% and 100%. These markers can then be used to predict where the market values will move to next, and therefore allow analysts like those at Accendo Markets to assist their clients in deciding where to place support and resistance in order to help lessen the effect of losses. The support and resistance points are usually placed on or very near the markers. Predicting can be done very simply by using a compass to draw arcs that pass through the markers, giving the analyst an idea where the next highs and lows will be. These are known as Fibonacci arcs. As well as being used to highlight where to place stop losses, Fibonacci retracements can be very useful in trading itself, for example deciding when and where to open a position on a particular market.

Accendo Markets

Fibonacci retracements are put to use by Accendo Markets as part of the research they do. This form of technical analysis allows the brokers at Accendo Markets to understand different areas of trading on their own terms, thereby ensuring the information they give to their clients will be well-informed and reliable.  Despite this, markets can of course move in unexpected ways, and no matter how careful the trader or knowledgeable the stock broker, losses are always a possibility.

Leveraged products involve a high level of risk and you can lose more than your original investment. They are not suitable for everyone so please ensure you understand the risks involved and if necessary please obtain investment advice from a financial adviser before investing.

For your reference, Accendo Markets Ltd. is Authorised and Regulated by the Financial Services Authority (FSA) No. 475285.