The golden cross trading strategy is still popular, but it's old.
When we tested the Golden Cross Strategy 100 times, it got a 42 percent approximate win
rate with a 1.5 to 1 reward risk ratio and the profit graph in the Trading Rush App went
in the upward direction, but it was not that good.
The Golden Cross Trading Strategy uses the Simple Moving Averages, and as you already
know, the simple moving average is a lagging moving average.
In fact, it is slower than the Exponential and Weighted Moving averages.
So what will happen if we improve the Golden Cross Strategy by switching the SMA with a
faster moving average like the weighted moving average.
And that's exactly what I did.
In the last video, we learned more about the weighted moving average and the strategy based
around it.
So in this video, I tested the better and faster Golden Cross Trading Strategy 100 times,
and here's what happened.
If you want to know more about the entry conditions, check out the previous WMA strategy video.
And Subscribe to the Trading Rush Channel and ring the notification bell, to see win
rates of more trading strategies we have tested 100 times so far.
Because you don't want to risk your money on a strategy that doesn't work.
Number 1.
Since the Original Golden Cross Trading Strategy got a 42 percent win rate, one can expect
a similar win rate with this modified Golden Cross, after all, all we are doing is replacing
the slower moving average with a faster one.
But surprisingly, the win rate was actually better.
In the Trading Rush App, the profit graph of the original Golden Cross went in the upward
direction at the beginning, but then started a downtrend and didn't really came back in
the positive territory until the very end.
Now remember, both strategies were tested on the same pair, same timeframe, and almost
the same market structure.
But if you look at the profit graph of the Weighted Moving Average Golden Cross, you
will see that it is more consistently going in the upward direction.
In fact, it never went into the negative territory at the start even though the market structure
was the same.
Why?
Why changing a simple thing as a moving average is making such a noticeable difference?
There is not much difference between the Weighted and Simple Moving Average, right?
Well, when the market movement is really good and the price is making big moves, you won't
notice much of a difference between the entry signals of the two moving averages.
One will be earlier than the other, but compared to the big moves price makes in a good trend,
they are not that far from each other.
But the problem is clearly visible in the slow-moving markets.
As you already know, the price stays in a range most of the time.
And when the trend is slow, the weighted moving average is like the Usain Bolt of moving averages,
and the SMA is like a turtle.
In the slow trending market, the WMA was so fast at reacting to the direction change,
that the entry signals it gave were actually profitable.
On the other hand, the simple moving average was so slow compared to the WMA, the entry
signals were generated near the end of the trend.
This is where the Weighted Golden Cross took the lead.
This is where the Simple Golden Cross lost money, but Weighted Golden Cross made money.
And as you can see in the Trading Rush App, the Weighted Golden Cross Trading Strategy
got a win rate of approximately 48 percent with a 1.5 to 1 reward risk ratio, which is
much better than the Original Golden Cross Trading Strategy.
When we tested the simple golden cross last time, it made a profit of 500.
Profit is still a profit, but the weighted Golden Cross because of the faster and better
entry signals, made a profit of 2000 which is a lot better.
It lost 7 trades in a row and won 4 trades in a row.
The best part is the profit graph.
The profit graph of the weighted Golden Cross is more consistent and looks way better than
the profit graph of the Simple Golden Cross.
5.8 + 7.5 + 6 + 6.5 + 7.3 = 33.1
And now, if we give the Faster Golden Cross Trading Strategy a Trading Rush Score, you
will see that it gets a 33.1 out of 50.
And if you come to the Official Trading Rush Website, you will see that it ranks 7th from
the top, just below the Ichimoku Cloud, and above the Alligator Trading Strategy.
And for reference, the Simple Golden Cross ranks 23rd from the top.
So we can say that the Weighted Moving Average definitely improved the Winrate of the Golden
Cross Trading Strategy.
If you want me to test more trading strategies 100 times, subscribe to the Trading Rush Channel
and ring that notification bell.
After all, you don't want to risk your money on a strategy that doesn't even work.
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