The MACD Crossover, Backtested: Big Returns, Bigger Drawdowns

The MACD crossover is the first strategy most traders learn. We backtested it honestly — the returns are real, and so is the pain.

Momentum5 min readBacked by real backtests

The MACD crossover — going long when the MACD line crosses above its signal line — is the classic momentum entry. It’s simple, it’s everywhere, and most people never check whether it actually works. We did, on 3.6 years of real daily bars.

The rules

The results

MetricMACD Flip 12/26/9
Profit factor2.43
Total / name (compounded)+150.8%
Avg return / trade+2.56%
Win rate45.1%
Trades379
Max drawdown−36.5%
The trade-off: MACD compounds the hardest of any single technical signal we tested (+150% per name) — but it does it through a 45% win rate and a brutal 37% drawdown. You lose more often than you win; the winners just run. That’s only tradeable if you can stomach the equity curve.

Making it better

Adding a 200-day trend filter (only take crosses above the 200-day) cut the drawdown and smoothed the ride — at the cost of some upside. In practice, MACD is best as a confirmation layer: when a mean-reversion or Stage-2 name also just flipped MACD bullish, that agreement is the real signal. Today, fresh MACD crosses fired on CVX, JPM and SBUX.

Key takeaways

  • MACD crossover compounds hard (+150% / name) but through a low 45% win rate.
  • The −37% drawdown is the price of admission — winners run, losers are frequent.
  • Best used as confirmation on top of RSI-2 or Stage-2 names, not standalone.

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FAQ

Is the MACD crossover strategy profitable?

In our backtest it returned a 2.43 profit factor and +150% per name — profitable, but with a 45% win rate and a 37% max drawdown.

What are the best MACD settings?

The classic 12/26/9 is what we tested. Adding a 200-day trend filter reduced drawdown at the cost of some return.

Does MACD work by itself?

It can, but it’s stronger as confirmation — when a name in an uptrend or an oversold dip also flips MACD bullish, the signals agree.