Golden Cross Trading Strategy (Backtest Analysis)
Golden Cross Trading Strategy is famous and a cited phenomenon in the media. In this post, we look at the performance of the Golden Cross in the S&P 500.
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.
We backtest the following trading rules:
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.
Let’s look at the equity curve (shown below)
You can find more info about this trading strategy here:
https://www.quantifiedstrategies.com/golden-cross-trading-strategy/