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Example of trading with MACD

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Case Study: Bajaj Auto

The chart below is of Bajaj Auto share for a period starting from July 2009 to may 2010. The chart shows signal line and MACD. We have plotted certain points at crossover where a buy or sell signal is generated.



Their can be two ways to trade first the bullish way i.e. first buy and then sell it and the other way bearish i.e. first sell and then buy.



We will first trade bullish

1. First occasion
2. Second occasion
3. Third occasion
4. Fourth occasion
5. Fifth occasion
6. Sixth occasion
By going bullish too we can trade profitably with around 1300 Rs.

Similarly we can trade bearish i.e. first sell and then buy

1. First occasion - we will sell at point B(1235 Rs) and buy at point C(1169 Rs), with a gain of 66 Rs.
2. Second occasion - we will sell at point D(1650 Rs) and buy at point E(1470 Rs), with a gain of 180 Rs.
3. Third occasion - we will sell at point F(1700 Rs) and buy at point G(1737 Rs), with a loss of 37 Rs.
4. Fourth occasion - we will sell at point J(1830 Rs) and buy at point K(1860 Rs), with a loss of 30 Rs.

By going bearish too we can trade profitably with around 180 Rs.

Let's compare long term traders with bullish traders

Very long term traders buying Bajaj Auto shares somewhere at point A(1025 Rs) and selling at point L(2080 Rs) will make profit of 1050 Rs.
While smart traders going both bullish and bearish trading may get profit of 1300 Rs + 180 Rs i.e. around 1500 Rs.

Other tutorials which further enhance better grasp on MACD can be found at:
Back to MACD Tutorial          When MACD should be avoided.          Video Tutorials On MACD

Our website provides free Stock screening based on MACD. It can be found at below link:

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(All analysis is based on End of Trade day's Value. Expected time of update is between 5 to 5.30 PM exchange time Zone)

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