Recently, while backtesting MACD parameters, I truly understood why so many traders get so caught up in this indicator.

Honestly, many people start with the default 12-26-9, thinking it’s pretty good. But when you begin to explore high-volatility markets like cryptocurrencies, or want to do short-term trading, you'll find that this set of parameters is a bit too sluggish. At this point, combinations like 5-35-5 start to catch your attention because they react much faster.

I previously conducted a comparative experiment, backtesting Bitcoin’s daily chart over six months using MACD parameters 5-35-5 and the standard 12-26-9. The results were quite interesting—5-35-5 indeed captured more turning points, with nearly double the signal frequency. But this also meant more noise, and some signals quickly became invalid.

The key is to understand the trade-off between sensitivity and stability. 12-26-9 is suitable for relatively stable markets like stock daily charts, filtering out most short-term fluctuations. But 5-35-5 MACD parameters are much more comfortable for short-term traders, especially if you want to catch rapid price swings. Of course, the price is enduring more false signals.

I’ve seen people try to find the “optimal” parameters, but honestly, that’s a false proposition. No set of parameters performs perfectly across all markets and all timeframes. Some use 19-39-9 for medium to long-term swings, others use 24-52-18 purely for long-term holdings. 5-35-5 is suitable for aggressive short-term trading, but that doesn’t mean it’s the best for everyone.

The most common pitfall is overfitting. When tuning parameters, it’s easy to modify them to make backtest results look good, fitting too closely to past data, which can lead to disastrous real trading results. My recommended approach is to select a set of MACD parameters, like 5-35-5 or the default 12-26-9, and use them for long-term observation and backtesting first. If they truly align with your trading logic, then verify them in live trading with small positions over some time.

Some traders also look at multiple MACD parameter sets simultaneously to verify signals, which is not a bad idea, but only if you have enough experience to judge which signals are genuine. For beginners, I still recommend mastering one set of parameters thoroughly before considering more advanced methods.

At the end of the day, MACD is just a tool. No matter how perfect the parameter setup, if your trading strategy itself is flawed, it won’t save you. So instead of obsessing over parameters, it’s better to focus more on backtesting, risk management, and disciplined execution.