Gerald Appel and the MACD Indicator
Appel turned the difference between two moving averages into one of the most used momentum indicators.
Trade a real day like Gerald Appel
A real market day with the date hidden. Run the checklist on the chart, then buy, sell or stay out: the real candles answer.
Check every point of the list before you decide. Stay out if the setup is not there.
Who they were
Gerald Appel was an American money manager, founder of Signalert Corporation and the author of numerous books on market timing.
He developed the Moving Average Convergence Divergence (MACD) in the late 1970s. Thomas Aspray added the histogram in 1986.
Principles and rules
1. Momentum leads
The gap between a fast and a slow average shows whether momentum is increasing or fading.
2. Signal line
Crosses of the MACD with its 9-period average time entries and exits.
3. Divergence
When price and MACD disagree, momentum is changing.
4. Trend first
Signals work best in the direction of the larger trend.
Key lessons
- Momentum indicators need a trend filter.
- Divergence is a warning, not a trigger.
- Simple tools, applied consistently, beat complex ones applied randomly.
Strategies from this method
How to practise it
The MACD crossover and divergence strategy pages have the rules. In Candlemind add the MACD template from My indicators.
Frequently asked questions
Who invented the MACD?
Gerald Appel, in the late 1970s. The histogram was added by Thomas Aspray.
What are the MACD settings?
12 and 26-period EMAs and a 9-period signal line.
Summaries and paraphrases of public books and interviews, for education. Not investment advice.