Introducing MACD+: The Enhanced Evolution of a Classic

The MACD+ indicator is everything you always wanted from a MACD (but were afraid to ask). It’s our best attempt at solving two key issues with the conventional MACD — an indicator we love, but recognize isn’t perfect.

Here’s what we improved:

1.     Amplitude normalization via logarithmic scaling – This keeps the signal’s amplitude consistent over time, providing a more stable and meaningful visual interpretation across different price levels and volatility regimes.

2.     A hysteresis zone around the signal line – This helps filter out noise and prevents false crossovers in sideways markets, reducing whipsaws without missing key trend shifts.

3.     Reduced lag in the signal – The conventional MACD uses standard EMAs, which introduces noticeable lag. By using zero-lag EMAs (which, despite the name, aren’t completely lag-free), we reduce that delay and make the indicator more responsive.

The original MACD calculates its lines directly from raw price data in dollars, meaning its amplitude increases as the stock price rises. Here’s what we mean:

Our guess as to why the original MACD wasn’t normalized is that the scaling doesn’t affect the crossover points — meaning that, for a given configuration, the strategy’s signals remain unchanged. So why normalize it using logarithmic scaling? Because keeping the signal within a normalized range allows us to preserve historical context, helping us better assess how overbought or oversold a stock might be.

See how a recent move down in Apple looks quite different when observed through a normalized lens:

Another improvement we made is something we often use in our own strategies: adding a hysteresis zone around the signal line. If you’re unfamiliar with the term, think of it as a “dead zone” around the signal line. Rather than triggering a crossover every time the MACD line touches the signal, the indicator only turns bullish when the MACD line crosses above the signal line plus a certain gap (alpha), and bearish when it crosses below the signal line minus another gap (beta).

Here’s an example with a hysteresis zone:

We introduced this feature to address a major flaw in traditional MACD-based strategies: they often flip between bullish and bearish signals in sideways markets. This not only erodes capital, but also damages investor confidence to the point where users stop following the signals altogether.

Let’s take a real example. Using a MACD with a signal period of 20 days, and fast and slow EMAs of 28 and 58 days respectively on Apple, we arrive at a configuration that, according to TuneMap, is one of the best possible setups to maximize return. And yet, here’s how it performed in 2023:

Not only did it trigger several false signals during a relatively calm period while Apple was mostly in an uptrend, it also completely missed a prolonged uptrend from April to mid-June.

Now, when you click “Compute Hysteresis” in TuneMap, we dynamically calculate two additional graphs (this can’t be precomputed because doing so would exponentially increase compute time):

·       A return multiplier map based on the alpha and beta values

·       A trade count map for the same

Alpha and beta represent the extra padding applied to the signal line on the buy side and sell side, respectively.

Here’s what we found for the strategy above:

By choosing an alpha of 2.9 and a beta of 8.8, we modestly increased the return (to 1.16x) while cutting the number of trades by more than half (from 23 down to just 10).

This is where MACD+ shines: not by dramatically boosting returns, but by eliminating unproductive signals — those flip-flop trades in quiet markets that exhaust both capital and investor patience.

To illustrate, here’s the exact same 2023 period shown earlier — but now using the MACD+ configuration with the alpha and beta values mentioned:

The final enhancement to MACD+ is the use of zero-lag EMAs instead of traditional EMAs. By definition, MACD is a lagging indicator—that’s just the reality. While we can’t eliminate lag entirely, we can reduce it, and that’s exactly what zero-lag EMAs aim to do.

Now, the term “zero-lag” might be a bit of an overstatement—we didn’t coin it, and to be clear, these EMAs don’t remove lag completely. But they do noticeably reduce it, allowing our version of the MACD to respond more quickly and effectively to shifts in price action.

Because this improved MACD doesn’t exist natively in TradingView, we’ve built it as a custom indicator for WU Advanced subscribers, under the name WU ADV MACD-P (We can’t use symbols like ‘+’ in an indicator name on TradingView anymore, nor can we use the umbrella symbol).

In this version, you can enter your alpha and beta coefficients (from TuneMap), along with more conventional parameters like fast, slow, and signal EMA lengths. The indicator also marks:

·       A green dot on bullish crossovers

·       A red dot on bearish crossunders

You can also set alerts on these buy/sell signals to track your strategy in real time.

Well, that’s the new baby. We put a lot of care into building it, and we hope you adopt it — and that it becomes a valuable companion on your investment journey.