Hi,
I’m currently studying the BabyPips School pages here regarding MACD indicators.
When I plot the same MACD as on the page I only have a sgnal line and a histogram (see above), whereas the one on the school page has another line?
Is this down to my MT4 platform’s capabilities do you think (Oanda) or can the MACD line still be interpreted with just the signal line and the histogram?
Cheers,
Simon
It can for [I][U]some[/U][/I] purposes, but not for others.
The histogram displays the difference between the two lines (one of which, as you rightly say, is missing from the chart you’ve shown).
So if you wanted to look, for example, at which of the MACD’s two lines was above the other, or whether they had crossed (“crossing the midline”), you could do that with the just the histogram, even taking away the remaining line as well.
If, on the other hand, you wanted to know whether [U]each[/U] line was above or below the midline, then you’d need both the lines to be shown.
I didn’t know that Oanda’s MT4 showed an MACD like this (I’ve never used it - maybe you can override that and change it, if you need to?). Their FxTrade interface presents it differently (and better, in my opinion).
If that was what you got after you incorporated that into you chart then I suppose that is the default (what everyone gets). I do not think the lines matter anyway (although this prompts questions as to why it was included at all).But I normally wouldn’t bother myself about the lines. Just focus on the histogram. Oscillators (RSI, Stochastic and MaCD) are famous for signaling oversold and overbought regions but I can’t see that on your shot – perhaps little adjustment in settings will do. Overbought and oversold do not work for me though. I prefer to look out for divergence if I ever want to consider using an indicator. Regard the two recent swing lows and compare to their representations on MACD – you see the misinformation? Swing low which is lower in actual price action isn’t so in MACD. That’s bullish divergence which informed what price did afterwards. Since you are just trying out at Babypips, it won’t be long before you found out what divergence are ( that is if you don’t already do).
Hi Lexys,
Thankyou for the explanation. 
I have now looked on the FXTrade platform and yes you are right in that it shows both lines. However i dont get on with that platorm really for charting purposes as there is no way to save chart templates in order to apply to new charts later on, and also you cant save a charting profile other than creating a whole new sub account for the process.
Your link does explain everything really well though so thankyou for answering so quickly.
Cheers,
Simon
As explained above, it depends what you’re using them for.
For some systems (such as the Mike Bruns MACD set-ups, for example), you specifically need one of the two lines to be above its midline and the other below it, for an entry, and the histogram [U]doesn’t[/U] tell you whether or not that’s the case: it shows you [I]only[/I] the difference between them.
I appreciate your good intentions, but how can you offer such advice, without even knowing what kind of system Simon’s trading? :23:
This is from Simon: “can the MACD line still be interpreted with just the signal line and the histogram?” One can deduce from that that he has not a system in mind (none that involves MACD for that matter); that he is simply trying his hands on MACD.
If that were so (which, by the way, it isn’t), wouldn’t that perhaps be all the more reason not to limit his choice of systems by advising him arbitrarily to ignore all the systems that require both lines to be displayed? 
I, at first, wanted to point out ways in which you have read me out of context, but this discussion has lost its value and I would like to discontinue it.
I suppose you answered me on what the lines are for – thank you:D
In my opinion, the MACD indicator in MT4 is 100% useless. Those who require MACD should get the ‘real one’. On the other side, if you have created your strategy on a dysfunctional indicator and are profitable you should not change it.
