MACD Histogram - What are the units of measurement?

Hey people,

It’s Sunday, late in the afternoon here and I thought I would do some reading on the MACD Indicator.

For those of you that don’t know, the histogram section of the MACD simply plots the difference between the fast and slow moving average.

But…What are the used units in this calculation to obtain this ‘histogram’

Is it a percentage difference? When the fast and slow moving average are equal to one another the histogram reads zero, as you would expect as at this exact point in time there is no difference between both moving averages.

Perhaps someone who uses MACD would be able to help here :slight_smile:

I don’t use a MACD or really see the need to, but it’s always good to know these little things

Thanks

The MACD histogram plots the arithmetic difference between the MACD line and the signal line.

Formulas and explanation can be found here: Moving Average Convergence-Divergence (MACD) - ChartSchool - StockCharts.com

MACD Line: (12-day EMA - 26-day EMA)

Signal Line: 9-day EMA of MACD Line

MACD Histogram: MACD Line - Signal Line

From the above it can be only assumed that the histogram is derived in pips and is the forth deviation of price, and not displayed as a Percentage. I was hoping it was as a percentage as a standardized criteria could then be used… oh well…

Ill design a new indicator and call it MAC-JEZZ

You could convert the price changes in percent rather than in pips and it would spit out a percent value. Probably have to modify it a bit but wouldn’t take more than an hour. Or have the output divided by current price would also give u a standardized percent. I believe using percent values is important if trading over a basket.