MACD Strategy for Polymarket

Master the MACD (Moving Average Convergence Divergence) indicator for trading Polymarket prediction markets. A momentum-based strategy that identifies trend changes and optimal entry points.

What is MACD?

MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator that shows the relationship between two moving averages of an asset's price. It's one of the most popular indicators in technical analysis.

Unlike RSI which measures overbought/oversold conditions, MACD identifies trend changes and momentum shifts — making it ideal for catching the start of a new move rather than betting on reversals.

MACD Components

MACD Line — The difference between the 12-period and 26-period exponential moving averages (EMA). When this line is above zero, short-term momentum is bullish.
Signal Line — A 9-period EMA of the MACD line. Acts as a trigger — crossovers between MACD and Signal generate trading signals.
Histogram — The visual difference between the MACD line and Signal line. Growing bars = strengthening momentum. Shrinking bars = weakening momentum.
Zero Line — When MACD crosses above zero, the short-term trend is bullish. Below zero = bearish.

Info

Standard MACD settings are (12, 26, 9). For faster signals on 15-minute prediction markets, some traders use (6, 13, 5) — but be aware this generates more false signals.

Why MACD Works for Polymarket

Catches trend starts — MACD crossovers often signal the beginning of a new price move — perfect for prediction markets where you need to be right about direction.
Works on all timeframes — Effective on 5-minute (BTC), 15-minute and 1-hour charts, matching Polymarket's resolution windows.
Clear, objective signals — Crossovers are binary — MACD is either above or below the signal line. No ambiguity.
Histogram shows conviction — The histogram tells you how strong the momentum is, helping you size positions appropriately.

The Strategy

Bullish Signal (Buy YES)

1
MACD line crosses above the Signal line
This is the primary bullish signal — short-term momentum is accelerating upward.
2
Confirm with histogram
The histogram should be turning from negative to positive (bars growing above zero).
3
Buy YES shares
On "price above" markets where the strike is near or below the current price.

Bearish Signal (Buy NO)

1
MACD line crosses below the Signal line
Short-term momentum is decelerating — price may fall.
2
Confirm with histogram
Histogram should be turning from positive to negative.
3
Buy NO shares
On "price above" markets where the strike is near or above the current price.

Pro Tip

The strongest MACD signals occur when the crossover happens far from the zero line. A bullish crossover deep in negative territory signals a powerful reversal.

Reading the Histogram

The MACD histogram is your best tool for gauging momentum strength:

Growing Green Bars

Bullish momentum is accelerating. MACD is pulling further above the signal line. Strong conviction for YES trades.

Shrinking Green Bars

Bullish momentum is fading. MACD is converging back toward the signal line. Consider taking profits.

Growing Red Bars

Bearish momentum is accelerating. Strong conviction for NO trades.

Shrinking Red Bars

Bearish momentum is fading. A bullish crossover may be imminent.

Risk Management

1
Wait for confirmation
Don't trade on the first tick of a crossover. Wait for the bar to close to confirm the signal.
2
Size based on histogram strength
Larger histogram bars = stronger momentum = larger position. Small bars = small position.
3
Avoid choppy markets
When MACD is flat near the zero line with frequent crossovers, the market is ranging. Stay out.
4
Use 1-hour markets for MACD
MACD is a lagging indicator. It works better on 1-hour markets where trends have time to develop.

Warning

MACD signals can lag significantly in fast-moving markets. On 15-minute prediction markets, by the time MACD confirms a trend, much of the move may already be priced in. Consider using faster settings or combining with RSI.

Automating MACD with Playground

MACD strategies are ideal for automation because the signals are objective and rule-based. In the Polyblock Playground:

1
Open the Playground
Navigate to the Playground from the main menu.
2
Describe your strategy
Tell the AI: "Buy YES when MACD crosses above signal line on BTC 1-hour markets. Size $15 per trade. Hold to resolution."
3
Review the configuration
The AI builds a structured strategy with all parameters. Adjust as needed.
4
Deploy
Activate the strategy and it trades automatically 24/7.

Combining MACD with RSI

The most powerful approach is combining MACD (trend/momentum) with RSI (overbought/oversold):

MACD for direction — Use MACD crossovers to determine whether to trade YES or NO.
RSI for timing — Wait for RSI to reach extreme levels before entering. This filters out weak MACD signals.
Example combo — Buy YES when MACD crosses bullish AND RSI is below 40. Buy NO when MACD crosses bearish AND RSI is above 60.

Pro Tip

This combo strategy can be built in a single Playground session. Tell the AI: "Buy YES when MACD is bullish and RSI is below 40. Buy NO when MACD is bearish and RSI is above 60."

Automate your MACD strategy

Tell the Playground AI: 'Buy YES when MACD crosses above signal line on BTC' — and it builds the full automated strategy for you.

Open Playground Read the Docs