Key results
- Total return
- -53.4%
- Buy & hold: +0.1%
- Annual return (CAGR)
- -7.3%
- Buy & hold: 0%
- Max drawdown
- -56.7%
- Buy & hold: -24%
- Win rate
- 26.45%
- Profit factor
- 0.8
- Trades
- 1,977
- Longest losing streak
- 23 trades
- Period
- Oct 2, 2016 to Oct 1, 2026
- 10 years
- Market
- EUR/USD
- 1-hour
Equity curve vs buy & hold
Returns year by year
| Year | Return | Trades |
|---|---|---|
| 2016 | +2% | 40 |
| 2017 | -0.8% | 176 |
| 2018 | -5.4% | 181 |
| 2019 | -8% | 223 |
| 2020 | +1.8% | 166 |
| 2021 | -14.3% | 222 |
| 2022 | -21.3% | 212 |
| 2023 | -0.6% | 173 |
| 2024 | -14.9% | 227 |
| 2025 | -2.7% | 203 |
| 2026 | -6.5% | 154 |
Calendar years, compounded from monthly results. The first and last years can be partial.
Combining MACD and RSI is one of the most searched indicator pairings: MACD for the direction change, RSI to check that momentum agrees. A popular form, listed among the strategies discussed on Quantified Strategies, takes the MACD line crossing zero and requires the RSI to be on a reasonable side. We tested a symmetric version, long and short, on ten years of hourly EUR/USD.
The rules we tested
- Market and timeframe: EUR/USD, 1-hour candles.
- Period: 2 October 2016 to 1 October 2026.
- Long entry: the MACD line crosses above zero and RSI(14) is above 40.
- Short entry: the MACD line crosses below zero and RSI(14) is below 60.
- Stop-loss: 45 pips. Take-profit: 90 pips, twice the risk.
- Exit: the stop, the target, or an opposite entry signal, which closes the trade and reverses the position.
- Costs and sizing: 0.02% commission per side, full position size on a 10,000 starting balance.
What the backtest shows
The account lost 53.4% over ten years (-7.3% a year), with a maximum drawdown of 56.7%. Holding EUR/USD over the same window did almost nothing (+0.07%) and drew down 24%. This is one of the clearest negative results in the library: the strategy turned a flat market into a large loss.
The win rate was 26%. With a 1:2 bracket, a strategy needs to win about one trade in three to break even before costs, so 26% is well short. But the bracket rarely decided the outcome: 1,417 of the 1,977 trades ended on an opposite signal, against 313 targets and 247 stops. In practice this is a stop-and-reverse system, flipping between long and short each time the MACD line crosses zero.
Trade count is the second problem. Close to 200 trades a year means commissions matter: 1,977 round trips at 0.04% each add up to roughly 79% of the position size over the period. That alone is larger than the final loss.
The yearly table shows no recovery phase. Only the partial 2016 (+2.05%) and 2020 (+1.79%) finished positive. The worst years were 2022 (-21.3%), 2024 (-14.9%) and 2021 (-14.3%).
Frequency multiplies everything
On an hourly chart, a small negative edge per trade becomes a large loss over ten years. Before judging a signal, check how many times it fires and what each round trip costs.
Why it doesn't work here
The MACD line crossing zero means MACD's fast and slow averages have just swapped places, a regime change on paper. On an hourly EUR/USD chart, that happens constantly inside ranges, and EUR/USD spent the decade moving back and forth with no net direction. The RSI thresholds (above 40 for longs, below 60 for shorts) are loose: they block only the crosses that happen when momentum is clearly the other way, which is rare at a zero cross. So the filter keeps almost every signal, good or bad.
What you could test next
- Move the same rules to the 4-hour or daily chart to cut the number of crosses.
- Tighten the RSI filter (above 55 for longs, below 45 for shorts) so only crosses with real momentum pass.
- Add a trend filter such as the 200 EMA and see whether removing counter-trend reversals changes the picture.
- Test the long side alone: with no opposite entry to reverse into, each trade has to reach its stop or its target.
Methodology and assumptions
- Starting capital
- 10,000
- Position size
- 100% of equity
- Commission
- 0.02% per side
- Data window
- Oct 2, 2016 to Oct 1, 2026
- Run date
- October 2, 2026
- No repainting: every signal is computed on closed candles only, so the backtest never acts on a price a trader could not have seen yet.
- Past performance does not predict future results. A backtest is a historical simulation, not a forecast.
Frequently asked questions
What are the rules of the MACD RSI strategy?
Buy when the MACD line crosses above zero while the 14-period RSI is above 40. Sell short when the MACD line crosses below zero while the RSI is below 60. In this test each trade has a 45-pip stop and a 90-pip target, and an opposite signal reverses the position.
Why does the MACD RSI combination lose so much on EUR/USD?
The hourly MACD crosses zero very often on a pair that spent ten years going nowhere, so most signals are noise. With 1,977 trades, commissions alone add up to roughly 79% of the position size, on top of a signal that had no edge.
What win rate does a 1:2 risk-reward strategy need?
About one trade in three to break even before costs. This strategy won 26% of its trades, and most of them ended on an opposite signal rather than at the stop or the target.
Does the RSI filter improve the MACD signal?
Not enough to matter here. RSI above 40 for longs and below 60 for shorts lets most crosses through, so the filter removes few trades.
Reproduce it, then change it
Every number on this page comes from the Backtrex engine. Rebuild the strategy in the app, then change the market, the timeframe or a parameter and see whether the result holds.
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