MACD Trading Strategy Validation

This project tests and validates a MACD-based trading strategy using historical stock data (example: AMZN_daily.csv).

The strategy uses:

• 12-day and 26-day exponential moving averages (EMAs)
• A 9-day signal line
• A 200-day EMA to determine long-term trend direction

A buy signal occurs when:

• MACD histogram crosses from negative to positive,
• both MACD and Signal are below zero, and
• the trend is upward (price > EMA200).

Each trade applies basic risk management with:

• Stop loss: 2%
• Take profit: 3% (1.5× risk)

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Related Video

Watch the full breakdown on YouTube:
Losing Loonies YouTube Channel Losing Loonies Patreon

Portfolio Simulation

The script simulates an initial portfolio of $1000, applying the strategy over time. Each trade outcome (win or loss) affects the portfolio’s value.

At the end, the script prints:

• Total accuracy (percentage of winning trades)
• Portfolio performance over time

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Results

Below are the generated results from the simulation.

Figure 1 — Trading Strategy Visualization

Shows:

• Price vs EMA200
• MACD and Signal lines
• Histogram and buy points

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Figure 2 — Portfolio Value Over Time

Shows:

• Portfolio growth (or decline) over time
• Each trade’s cumulative effect on total value

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