The golden cross: 50-day and 200-day moving averages
Stocks are held while the 50-day average is above the 200-day one. The opposite crossing, the death cross, is the signal to leave.
The rule
Compute two average prices of the index: over 50 days and over 200 days. When the fast one rises above the slow one, buy. When it falls below, sell.
Why people use it
Two averages are smoother than a price, so the rule changes its mind rarely, a couple of times a year, and costs little. It keeps you in long rallies and out of long bear markets.
Where it hurts
It is slow. The signal comes weeks after the turn, so part of the fall is taken in full and part of the recovery is missed. Fast crashes, as in March 2020, are over before it reacts.
How our bot runs it
The bot compares the 50-day and 200-day simple averages of SPY at every close. Golden cross: SPY. Death cross: BIL (short Treasury bills).
Live account
A virtual $100,000 account that follows this rule. Every trade is on the bot's page.
| Bot | Account | Return |
|---|---|---|
| Golden cross on S&P 500 | $99,863 | −0.14% |