Golden Cross and Death Cross are very popular strategies for any Trend following Trading system. You might have heard about these terms if you have subscribed for any of the Technical analysis course or tutorial. Even if you haven’t, we would help you understand these terms and its application. In this post, we would also provide you an Excel sheet where you can backtest Golden Cross and Death Cross on any of the Stock or Index. Please read through below.
Read our other Excel based Trading strategies here.
What is Golden Cross and Death Cross?
Golden Cross and Death Cross are important Trend reversal points on a Technical chart of a Stock or Index. Its is based on Moving Average Crossover. It is a general rule that Stock gives a Buy signal when faster moving average crosses above the slower moving average, while its gives a Sell signal when faster moving average crosses below the slower moving average. Golden Cross is indicated when 50 Days simple moving average crosses above the 200 day moving average. And Death Cross is indicated when 50 Days moving average crosses below the 200 day moving average. Either crossover is considered more significant when accompanied by high trading volume.As simple as that! It works perfectly on majority of indices and stocks in a long term.
|Indicators Used||50 Days SMA, 200 Days SMA|
|Buy Condition||50 Days SMA is above 200 Days SMA|
|Short Condition||50 Days SMA is below 200 Days SMA|
|Stop Loss||No fixed stop loss, Stop and reverse when excel gives opposite signal|
|Targets||No fixed target, Stop and reverse when excel gives opposite signal|
|Worksheet Name||Golden Cross and Death Cross|
|Inputs||Stock Name (B4)||Name of the Stock or Index. Ex: NSE:NIFTY, NASDAQ:AAPL|
|Quantity (B5)||Number of shares to Buy when Golden Cross or Death Cross happens|
|Initial Capital (B6)||Your initial Trading capital|
|Number of Days (B7)||Number of days to backtest this system|
|Outputs||Final Capital (E4)||Final capital after backtest period.|
|Profit Points (E5)||Total points earned|
|Total Profit/Loss (E6)||Total Profit/Loss in Exact terms|
|Total Profit/Loss % (E7)||Total Profit/Loss in Percentage terms|
How to use this Excel Sheet
Step 1: Open the sheet from the link provided at the end of this post.
Step 2: Provide inputs in Cells B4 to B7. Make sure that you are connected to the internet.
Step 3: Wait for around 30 seconds. The sheet will update automatically depending on the inputs you provided.
Step 4: Check the outputs in Cell E4 to E7.
Step 5: Take Buy/Short position based on the signal at Position column.
Below is the link to this sheet from Google Docs. You can edit it online. There is no need to download it in your local machine.