The Golden Cross strategy is based on crossing two moving averages, one that is shorter-term (usually the 50-day moving average) and one that is longer-term (usually the 200-day moving average). When the shorter-term moving average crosses above the longer-term moving average, it is seen as a bullish signal, indicating that the asset's price is likely to rise. In this backtest, we set Stop Loss and Trailing Stop Loss to 5 and Take Profit to 20 multiplies of the 14-day ATR indicator value and used the S&P 500 index components as a stock universe.
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Backtesting Results Disclaimer
Past hypothetical backtest results are neither an indicator nor a guarantee of future returns. Actual results may vary from the analysis. Hypothetical performance results have many inherent limitations and cannot fully account for market factors such as bid-ask spread, slippage, and commission costs. There are numerous other factors related to the markets, which cannot be fully accounted for in the backtesting algorithm, but all of which can adversely affect actual trading results.
