Recently, while reviewing my trading records, I thought again about the classic indicator MACD. Many traders, as it turns out, rely on MACD golden cross and death cross to judge market conditions, but there are actually not many people who can consistently make money. Today, let’s talk about the ins and outs of this indicator.

The core logic of MACD is actually quite simple. When the fast line crosses above the slow line, it forms a golden cross (golden cross), which means momentum is strengthening and the market may rise afterward. Conversely, when the fast line crosses below the slow line, it forms a death cross, indicating that momentum is weakening. But the problem is that although this signal looks simple, there are especially many traps in real trading.

I’ve noticed that many people judge MACD golden cross too mechanically. In fact, besides watching the crossover between the fast line and the slow line, you can also look at how the histogram’s color changes. When it shifts from negative to positive, it’s a golden cross; when it shifts from positive to negative, it’s a death cross. These two methods are essentially the same—just viewed from different angles.

A more careful observation is that the significance of golden crosses and death crosses is completely different depending on whether they occur above or below the zero axis. A golden cross above the zero axis means the market is already in an uptrend; at this time, the golden cross is a signal of trend acceleration. A golden cross below the zero axis means a rebound from a decline—possibly a bottom signal. Many people ignore this detail.

I once backtested a MACD golden cross strategy using S&P 500 data from 2010 to the present. As long as you buy when there is a golden cross and sell when there is a death cross, and you don’t use leverage at all, you can actually make money. But that looks good only at the weekly level—on the daily and hourly charts, it’s all false signals.

This brings us to MACD’s biggest problem: lag. When you see a beautiful MACD golden cross on your screen, the market may have already risen quite a bit. You never know how much longer it can keep rising. And in choppy markets, the fast line and slow line cross frequently, so false signals fly everywhere. I’ve seen too many traders get lured in by this fake MACD golden cross, only to be knocked out later.

To improve accuracy, relying on MACD alone isn’t enough. My current approach is to add EMA 99 as a reference for the long-term trend. Only when the price is above EMA 99 and a MACD golden cross appears do I consider it a truly valid buy signal. Doing this clearly improves the win rate. It’s also important to combine it with technical analysis—for example, when the price breaks through a key resistance level while a golden cross appears, that kind of combined signal is more reliable.

The final piece of advice is: never treat MACD golden cross as a guaranteed winning signal. I’ve seen too many traders get wildly overconfident after a few successful MACD trades, start adding to positions and increasing leverage. Then, when the next death cross comes, the account explodes immediately. Strict risk management is always more important than any indicator. MACD is just a tool, not a holy grail. Only by pairing it with other indicators and technical analysis can you make your trading more stable.