Trend following · 12/26/9 MACD
MACD Crossover Strategy — Trend-Following with Momentum Confirmation
Buy when the MACD line crosses above its 9-period signal line; exit on the inverse cross. A clean signal for catching the meat of a trend without trying to call tops or bottoms.
Why MACD
MACD compresses two pieces of information — short-term momentum (12 EMA) versus longer-term momentum (26 EMA) — into a single oscillator. Crossovers mark the moments when short-term direction flips, making it a natural trigger for trend-following entries and exits.
Strengths and weaknesses
MACD shines in trending regimes and gives back gains in chop. Whipsaws are the main cost: in a sideways market the line can cross the signal multiple times per week, racking up small losses. A volume or ADX filter cuts most of these false signals.
Tunable parameters in Investapp
Fast EMA (12), slow EMA (26), signal period (9), plus optional ADX filter and minimum bar separation between signals. Run parameter optimization to compare metric outcomes across historical data.
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