Trigger Line

So...you’re a trader. How do you decide when to go long, and when to go short? The trigger line will help you pull the right...er, trigger.

It’s thought that the trigger line helps spot trend reversals early, making it handy for short-term traders. It's a technical calculation that can be used to determine when to enter or exit a security based on when two lines cross.

One line is the moving average convergence divergence, or MACD. MACD is calculated using two moving averages of a security, creating one trend-following momentum indicator. The other line, the trigger line, is the exponential moving average (EMA) of the MACD over nine periods, which some traders use to predict future price trends. Although, you can set your trigger line to whatever you want if you prefer to adjust it yourself.

When the trigger line crosses the MACD line, it’s time to move, move, move! When the trigger line rises above the MACD, things are looking bearish...better short the stock. When the trigger line falls below the MACD line, things are looking bullish...better buy and hang on for dear life.