Golden Cross Trading Strategy (Backtest Analysis)

A Golden Cross happens when the short moving average crosses above the long moving average. As a trading signal, it works reasonably well. It keeps you invested in bullish markets and keeps you out of trouble when we get a bear market. It involves two moving averages – one short and one long. When the short-term moving average crosses above the long-term moving average, we have a Golden Cross.

We backtest the following trading rules:

Here we use daily bars. But you can, of course, use any time frame you want. There is no right or wrong in trading as long as it works.

➨ The trading rules are simple. When the 50-day moving average crosses above the 200-day moving average, it signals a bullish breakout, and you buy.

➨ Conversely, when the 50-day moving average crosses below the 200-day moving average, it signals a bearish breakout, and you sell your position.

Below is shown the equity curve.

We published the backtest results, trading statistics, metrics and the Golden Cross Trading Strategy Glossary here >>

https://www.quantifiedstrategies.com/golden-cross-trading-strategy/