MACD crossover strategy is one of the best strategies which you can use while trading stocks, forex, and cryptocurrencies. It is a great strategy both for day trading and swing trading. In this video, I tested the MACD Strategy 100 times.

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MAC-D is one of the most popular indicators out there. It is used by lots of traders from beginners to pros. But a question comes to mind when you think about MAC-D: “Can you really make money with only one indicator that is so easy to use?” In this video I will backtest the MAC-D trading strategy 100 times. So that you will not have to lose money on a strategy which does not work.
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The strategy I will test, is called the MAC-D crossover strategy. We will use just the MAC-D indicator and the 200-period exponential moving average. Many traders criticize MAC-D is because it is so basic and it can give many false signals. But at the end of the video, you will see the winning rate of the MACD indicator, and you can decide for yourself, if you want to use it or not. If I lose money at the end of the 100 trades, we can say that MACD crossover strategy is not profitable at all.
The strategy we will use is a trend trading strategy. We will use the 200-period exponential moving average to identify the trend, and we will trade in the same direction of the trend. If the price is above the moving average, we can confirm that there is a positive trend. And there is a downward trend if the price is below the moving average.
In our strategy I will open only look to buy if the price is above the 200-period moving average and I will only look to sell if the price is below the average. So if the price is higher than the 200 EMA we will go long when MACD gives us the buy signal, and we will go short, when the MAC-D gives us the sell signal below the EMA.
Don’t worry I will show you what is a buy signal, and what is a sell one. You know that MAC-D has two lines, the blue line, and the red one. It is a buy signal when a MAC-D crossover happens below the baseline. So we will go long if the blue line goes above the red one, below zero point.
Here, let me show you an example. You can see that, the price is higher than the moving average. So, there is an upward trend. And, there is a MAC-D crossover here. The blue line crosses above the red one below the zero point. It is a buy signal so we will go long here. It was a nice trade and it was a winner, we made a 2% profit on this one.
Before starting to test, I want to show you a short signal too. MAC-D gives a sell signal when the blue line crosses down the red one above the zero point. In this example, price is below the moving average, that confirms the downward trend. And blue line crosses down the red one above the baseline. We will open a short position here. We lost this trade, since it hit our stop-loss. But don’t worry, it was a right trade to open. We will have winner and loser trades, don’t let them bother you, since we only care about the long term winning ratio.
I will risk the strategy 100 times on the stock market. But you can use the same strategy on any kind of market including forex, and cryptocurrency markets. I will test 2 stocks, 50 times each. For the test, I picked the Microsoft and the Walmart stocks. I will use the 1 hour time frame and I will open both long and short trades.
In the test, I am using 2 to 1 Risk-reward ratio. I mean that I will risk only 1 percent of my capital to make 2. So at the end of the test, we can still have a profit, even if we lose more than half of our trades. You should always use a risk-reward ratio higher than 1.5. In the backtest, I will only open trades that I risk only 1 percent of my capital. So, loser trades will cost me 1 percent while winner trades earn me 2 percent.
And I will assume that, you will trade with the same size on each trade. Let’s say that our position size is 1000 Dollars. We will make 20 dollars, if the trade we took is a winner. And we will lose 10 dollars each time we have a loser trade. At the end of the 100 trades, we will see how much we can make with 1000 dollars. Or maybe, we will lose money at the end. Therefore, you should always backtest your strategies to know your winning ratio. If you know your win ratio, you will be much more comfortable with the strategy you use.