MACD Trend Following Strategy
Table of Contents
Emily’s Morning Commute and the Secret of the MACD Wave
It was a crisp Tuesday morning in Charlotte.
Emily packed her scrubs, grabbed her coffee, and rushed to catch the city tram — her usual commute to the hospital.
Every morning was the same:
- Some days, the platform was packed shoulder-to-shoulder, and trains came one after another.
- Some days, there were long, dragging waits, and commuters grew restless, checking their watches.
As she stood on the platform, watching the tracks disappear into the distance, she noticed a familiar pattern:
When the first train arrives and it’s nearly empty, the second one usually comes fast — the flow picks up.
But when the platform stays crowded and no train comes for a long time, the flow weakens.
It wasn’t chaotic — it flowed in waves.
Emily thought:
"There’s a rhythm to this. If I could catch the moments when the flow starts or ends, I’d move faster and smarter."
She smiled. It felt oddly familiar to something she had been studying: MACD — Moving Average Convergence Divergence.
The Connection Sparks
On the tram ride, Emily opened her tablet and checked her trading app.
She remembered:
- The MACD line is like the pulse of traffic — how fast the flow is moving.
- The Signal line is like the steady expectation — the normal pace.
- When the MACD line crosses above the Signal line ➔ Momentum is picking up — like trains arriving faster ➔ Time to board (Buy).
- When the MACD line crosses below the Signal line ➔ Momentum is slowing — like waiting too long ➔ Time to step off (Sell).
"Trading is just like catching the right tram.
Don't jump when the platform is empty.
Wait for the wave to show up — then ride it."
It clicked perfectly in her mind.
The Real Trade — Microsoft (MSFT)
Later that morning during her break, Emily checked the market:
- Microsoft was slightly down in early trading.
- The 1-minute chart showed a narrowing between the MACD line and the Signal line.
She watched carefully, just like she watched the approaching tram.
And then — there it was:
MACD blue line crossed strongly above the orange Signal line and Volume was ticking higher
It was like hearing the faint rumble of an approaching train — the flow starting.
Emily immediately placed her trade:
- Bought 50 shares of MSFT at $311.70.
- Tight stop-loss just below support.
- First profit target: $313.00.
The Ride
The momentum picked up exactly like a busy tram line:
- Price moved upward steadily.
- Volume confirmed the energy behind it.
- The gap between MACD and Signal widened — the flow was strengthening.
Emily didn’t panic.
She didn’t overthink.
She trusted the flow.
At $313.00, she sold half her position, locking in some profit.
She trailed her stop-loss tighter under the rising price, riding the remaining momentum.
The Exit
At 10:18 AM, she noticed the familiar slowdown:
- MACD line curved downward.
- Crossed below the Signal line.
No hesitation — she sold the rest of her shares at $313.20.
Profitable, clean day trade, all because she had waited for the signal, not jumped blindly.
Lessons from the Commute
That evening, sipping her second coffee of the day, Emily smiled:
"Markets move like morning traffic.
Impatient people jump early and get stuck.
Smart riders wait for the real flow — and ride it calmly."
She realized:
- MACD is just a map of momentum — just like understanding the flow of people and trains.
- You don't need to predict — you just need to recognize the early signals and react fast.
Emily's Key Takeaways
Morning Commute Analogy | Stock Market MACD Lesson |
---|---|
First train arrives fast | MACD crosses above Signal ➔ Buy |
No train for long time | MACD crosses below Signal ➔ Sell |
Crowded platform but no train | Fake moves ➔ Avoid early entries |
Watch the real flow start | Trust confirmed crossovers |
Super Simple Analogy:
🚋 Train arriving fast (MACD up crossover) ➔ Jump on and ride ➔ Buy.
🛑 Train flow slowing (MACD down crossover) ➔ Step off ➔ Sell.
Final Thoughts
- Day trading is NOT guessing — it’s waiting for momentum to show itself.
- MACD isn’t predicting the future — it’s telling you when the flow has truly begun.
- Patience and reaction speed are more important than predictions.
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