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Golden Cross Trading Strategy.
Welcome to our video on the Golden Cross indicator strategy. In this video, we will explain what a Golden Cross is and how to use it to trade in the stock market.

A Golden Cross is a chart pattern that occurs when a short-term moving average crosses above a long-term moving average. Typically, traders use the 50-day moving average as the short-term moving average and the 200-day moving average as the long-term moving average. However, you can use any type of moving average with this Golden Crossover strategy, and a backtest will determine its effectiveness.

The Golden Cross strategy aims to take advantage of the long-term upward trend in the stock market while minimizing drawdowns during bear markets. It is prone to whipsaw signals, but the few big winners compensate for any losses.

To follow the Golden Cross strategy, you buy when the 50-day moving average crosses above the 200-day moving average, indicating a bullish breakout. Conversely, you sell your position when the 50-day moving average crosses below the 200-day moving average, signaling a bearish breakout.

In this video, we will show you an example of a Golden Cross in a chart, where the 50-day moving average breaks above the 200-day moving average. You can see that you would have bought the S&P 500 in July 2020 at 2867 and sold in March 2022 at 4173, yielding a 32.4% gain.

We will backtest the Golden Cross Trading Strategy strategy on the S&P 500 since 1960, where we see that there were only 32 trades. The backtest results show that 78% of the trades were winners, with an average trade gain of 15.4% and an annual return of 6.6%. Although the annual return is slightly lower than the buy-and-hold return of 6.9%, we must remember that the Golden Cross strategy was invested only 69% of the time. Additionally, the strategy had lower drawdowns, with 33% compared to buy and hold's 56%, giving a risk-adjusted return of 9.5%.

We hope this video helps you understand and use the Golden Cross indicator strategy to make profitable trades in the stock market.

Chapters
0:00 Intro
0:37 What is the Golden Cross?
0:57 Why you should use it
1:18 Trading Rules
1:36 Trade Example
2:00 Performance and Trades
2:16 Backtest Results
2:54 Equity Curve
3:00 Code
3:15 Complementary System

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RISK DISCLAIMER
Quantified Strategies (SIA Lofjord) is not an investment advisor. The content and information provided are educational and should not be treated as financial advisory services or investment advice. Trading and investment in securities involve substantial risk of loss and is not recommended for anyone that is not a trained trader or investor – it shall be conducted at your own risk. It is recommended that you never risk more than you are willing to lose. Leverage can lead to substantial losses. Any use of leverage, margin, or shorting is at your discretion. Quantified Strategies (SIA Lofjord) is not responsible for any losses that occur as a result of its content and information.
Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, Since the trades have not been executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representations are made that any account will or is likely to achieve profit or losses similar to those shown.