# What MACD Measures and How It Is Calculated MACD measures the difference between two exponential moving averages of a security's closing prices. This primer explains how that value is calculated. By OPT Team | Published 2026-10-16 | Updated 2026-10-16 [Read the canonical HTML article](https://www.onepurposetrading.com/blog/what-macd-measures-and-how-its-lines-are-calculated) ## What does MACD measure? ## Summary MACD measures the difference between two exponential moving averages of a security's closing prices. MACD is calculated by subtracting the 26-period exponential moving average of a security from its 12-period exponential moving average; comparing the moving averages gives MACD trend-following characteristics, and plotting their difference as an oscillator gives it momentum characteristics. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/glossary/glossary-m) Every reading in this article comes from past market data; none of it is a forecast. ## How is MACD calculated? ## Summary MACD is built from two exponential moving averages of closing prices, then the difference between them. The MACD line is calculated as the 12-day Exponential Moving Average (EMA) of a security's closing prices minus the 26-day EMA of the same closing prices. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) In plain words, step one finds the 12-day EMA of closing prices. Step two finds the 26-day EMA of the same closing prices. Step three subtracts the 26-day EMA from the 12-day EMA, and the result is the MACD line described above. The values of 12, 26, and 9 are the typical settings used with MACD, though other values can be substituted depending on a trader's style and goals. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) ## Where did MACD come from? ## Summary MACD was developed by Gerald Appel in the late seventies. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) ## What does published research say? ## Summary The sources cited here include no published test of the Moving Average Convergence Divergence. Our sources include reviews of technical trading rules in general. A 2007 review by Cheol-Ho Park and Scott Irwin looked at 95 modern studies of technical trading rules in general: 56 reported positive results, 20 negative results, and 19 mixed results. Despite that positive evidence, the review found that most of the studies had problems in their testing, such as data snooping and difficulty estimating risk and transaction costs, and said future research must fix them before the evidence can be called conclusive. [RePEc IDEAS](https://ideas.repec.org/a/bla/jecsur/v21y2007i4p786-826.html) A 2011 St. Louis Fed working paper by Christopher Neely and Paul Weller reviewed research on technical trading rules in general in currency markets. It reported that simple rules on dollar exchange rates gave positive returns, after accounting for risk, for 15 years in the 1970s and 1980s before those returns disappeared, and that more complex, less studied rules have since produced more modest returns. [Fed in Print (Federal Reserve)](https://fedinprint.org/item/fedlwp/9562/original) ## How is MACD commonly used? ## Summary A MACD reading shows how far apart the two moving averages are at a given point. When the MACD line is above zero, it shows that the 12-day EMA is higher than the 26-day EMA at that point in time. When the line is below zero, the opposite is true. The MACD line is calculated as the 12-day Exponential Moving Average (EMA) of a security's closing prices minus the 26-day EMA of the same closing prices. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) For example, a MACD line that moves from a negative value toward zero shows the shorter average narrowing its distance from the longer average over that period. This example is illustrative only and does not indicate typical results. ## What are the limits and common misreads? ## Summary MACD has no fixed range and its values cannot be compared across different securities. Moving Average Convergence Divergence is calculated from past market data; it is not a forecast. Even though it is possible to identify historically overbought or oversold levels for MACD, it has no upper or lower limits to bind its movement, and during sharp moves it can continue to extend beyond its historical extremes. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) Because the MACD line is calculated from the actual difference between two moving averages, its values depend on the price level of the underlying security, so MACD values cannot be compared across securities with different prices; for example, the MACD for a $20 stock may range from -1.5 to 1.5 while a $100 stock may range from -10 to 10. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) No indicator predicts the next move. ## How is MACD read alongside other context? ## Summary MACD readings are one source of information among several that people may look at together. Reading MACD next to price action, volume, or other indicators adds more information about what has already happened. Some people try one indicator at a time against their existing rules before adding it to a routine, covered in [Trying one indicator at a time while keeping your existing rules](/blog/how-to-test-one-indicator-without-changing-the-rules). No indicator or combination of indicators makes an outcome certain. Trading involves the risk of loss. ## Key takeaways - MACD measures the difference between a 12-day and 26-day exponential moving average of closing prices. - The values of 12, 26, and 9 are typical settings, though other values can be substituted. - MACD values depend on the price level of the underlying security and cannot be compared across different securities. - MACD has no fixed upper or lower range, even though historical extremes can be noted. - Every reading in this article comes from past market data; none of it is a forecast. ## Disclosure This article is educational and is not personalized financial advice. Trading involves the risk of loss. ## Next step For more on trying one indicator at a time while keeping your existing rules, see [this piece on the OPT journal](/blog/how-to-test-one-indicator-without-changing-the-rules). ## Frequently asked questions ### Does MACD have a fixed range? Even though it is possible to identify historically overbought or oversold levels for MACD, it has no upper or lower limits to bind its movement, and during sharp moves it can continue to extend beyond its historical extremes. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) ### Can MACD values be compared across different securities? Because the MACD line is calculated from the actual difference between two moving averages, its values depend on the price level of the underlying security, so MACD values cannot be compared across securities with different prices; for example, the MACD for a $20 stock may range from -1.5 to 1.5 while a $100 stock may range from -10 to 10. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) ### What default settings are commonly paired with MACD? The values of 12, 26, and 9 are the typical settings used with MACD, though other values can be substituted depending on a trader's style and goals. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/macd-moving-average-convergence-divergence-oscillator) ## Risk disclosure This article is educational content from One Purpose Trading. It is not financial, investment, tax, or legal advice, and nothing here is a recommendation to buy or sell any security or instrument. Trading involves substantial risk of loss and is not suitable for everyone. You can lose more than your initial investment. Any examples, figures, or scenarios are illustrative only. Results are not typical, and past performance does not guarantee future results. You are responsible for your own decisions. Trade only with capital you can afford to lose, and consider consulting a licensed professional about your individual situation.