MACD explained: how it works, and how often the cross wins
9 min read · Updated 2026-09-29
MACD (moving average convergence divergence) measures the gap between a fast and a slow exponential moving average, and then smooths that gap into a second line. It shows whether short-term momentum is pulling away from the longer trend or falling back towards it. The standard settings are 12, 26 and 9.
The most common MACD signal is the crossover of the MACD line and its signal line. We measured it: across our 41 markets, hourly MACD crosses worked 48.7% of the time. Below you can see it on a real gold chart, the scoreboards on four markets, and its win/loss record next to a fair coin.
See it on a real chart: Gold (XAUUSD) liquidation heatmap — the modeled clusters above and below the current price.
The three parts of MACD
- MACD line: the 12-period EMA of the close minus the 26-period EMA. Positive when the fast average is above the slow one.
- Signal line: a 9-period EMA of the MACD line itself - a smoothed version of it.
- Histogram: the MACD line minus the signal line, drawn as bars. It grows when the two lines move apart and shrinks when they converge.
Because MACD is built from moving averages of the close, everything in it comes from past prices, and it inherits their lag - twice, since the signal line is an average of an average.
How traders read MACD
- Signal-line cross: the MACD line crossing above the signal line is read as bullish, below as bearish. This is what we tested.
- Zero-line cross: the MACD line crossing zero, which is the same event as the 12 and 26 EMAs crossing each other.
- Histogram: bars shrinking towards zero are read as momentum fading before a cross.
- Divergence: price making a new high while MACD makes a lower high (or the reverse at lows) is read as momentum weakening. Divergence is subjective to spot and not part of our test.
Settings
12/26/9 is the default on almost every platform, originally chosen for daily charts. People use faster settings for intraday charts and slower ones for weekly charts. Changing the settings changes how many signals appear and how late they come; it does not change the basic fact that the line is made of past closes.
What we measured: MACD crosses on real charts
Every cross of the MACD line (12/26) over its 9-period signal line is a buy signal, every cross under it a sell. For each one, a signal counts as a win if price moved one average true range (ATR) in its direction before it moved one ATR against it, within 48 candles, and as a loss if the reverse happened first. Same rule for every market and every indicator in this series.
How the signals did in the last month
Now: 1 loss in a row · longest 6 wins, 5 losses
Could be luck — chance alone gives 37–63% over 53 signals
A run does not make the next signal likelier to win — we checked 15,192 signals.
Now: 1 loss in a row · longest 3 wins, 6 losses
Could be luck — chance alone gives 37–63% over 53 signals
A run does not make the next signal likelier to win — we checked 15,192 signals.
Now: 2 losses in a row · longest 5 wins, 3 losses
Could be luck — chance alone gives 36–64% over 46 signals
A run does not make the next signal likelier to win — we checked 15,192 signals.
Now: 4 wins in a row · longest 5 wins, 4 losses
Could be luck — chance alone gives 35–65% over 45 signals
A run does not make the next signal likelier to win — we checked 15,192 signals.
The roulette view: the indicator next to a coin
Below is every decided signal from the four boards above, one after another, and under it the same number of tosses of a fair coin (a fixed simulated sequence, not re-rolled). Look for the runs: both have streaks of several wins and several losses. A streak is what randomness looks like; it is not a sign that the indicator is “hot” or that a win is “due”.
Streaks: why MACD sometimes looks brilliant
In the two rows above, the real MACD record and a simulated fair coin both show runs of several wins and several losses. That is why MACD has passionate fans and equally passionate critics: each group met it during a different run. In 100 tosses of a fair coin, a run of six or seven of the same side is normal.
And a losing run does not make a win due. Across 15,192 hourly signals on 41 markets, after one to five losses in a row the next signal worked 41-56% of the time - within what chance produces.
What that means in practice
- MACD is a compact way to see whether short-term momentum is above or below the longer trend. On our data, the signal-line cross on its own is not a forecast.
- More confirmation from other lag-based indicators does not add independent information: they are calculated from the same closes.
- Judge any rule by a large number of signals against a baseline at the same distance, not by a handful of screenshots.
The same scoreboard, per timeframe, is on every market page - for example the EUR/USD signal truth section. Moving averages, RSI and the stochastic are covered in the other articles of this series.
Educational content, not financial or investment advice. Nothing here is a recommendation to buy or sell anything. Figures describe history and models, not what will happen. Trading leveraged products such as CFDs, forex and crypto derivatives carries a high risk of losing money.
See it on a chart
The Gold liquidation heatmap is free on a 24-hour delay — and live for 7 days when you create a free account. No card.