Golden Cross 50 200 (Trend)
Buys on the golden cross — the 50-bar average crossing above the 200-bar average — and sells on the death cross, when it crosses back below.
How It Works
- Compute two simple moving averages: a medium 50-bar one and a long 200-bar one.
- Buy on the golden cross — the 50-bar average crossing above the 200-bar: the medium-term trend has overtaken the long-term one, the classic sign a major uptrend is underway.
- Sell on the death cross, when the 50-bar average crosses back below the 200-bar.
Worked example. The 50-bar average has been climbing and prints 101.2 today against a 200-bar average of 101.0, having been below it yesterday — a golden cross, so buy. Much later the 50-bar average slips back under the 200-bar — the death cross — and the position is closed.
The Math Behind The Indicators
Everything runs on closing prices of the traded timeframe: P is a close, Pt today's close, and N counts bars — one bar is one candle of that timeframe, so 20 bars on a 1h chart is 20 hours.
- Simple Moving Average (SMA)
- The plain average of the last N closing prices: add them up, divide by N. It smooths out bar-to-bar noise so the underlying direction is easier to see — a rising SMA means recent prices sit above where they used to be.
- Example: With N = 3 and closes 100, 102, 104 the SMA is (100 + 102 + 104) / 3 = 102.