Trend Following (Golden Cross)
Hold the direction the market is already going; let winners run and cut everything else.
Trend StrategiesAdvanced 7 min read· Lesson 1 of 9 in Trading Strategies
Overview
The oldest documented edge: markets trend more persistently than chance allows. You will lose small often (whipsaws) and win big rarely (the two trades a year that trend for months) — the P&L distribution is lumpy by design, and most people can't sit through it. That, not secrecy, is why it still works.
Market conditions
Trending markets (ADX > 25); murdered by choppy ranges. Works across timeframes; classically run on daily/weekly.
Entry rules
50MA crossing above 200MA (Golden Cross), or price reclaiming a rising 200MA. Few signals — that's a feature.
Exit rules
The reverse cross (Death Cross), or a trailing stop. No profit targets: capping winners kills the lumpy math.
Stop loss
Structural: below the swing low predating the cross, or a wide (3×ATR) trail.
Position sizing
Fixed-fractional: risk ≤1% of equity per position; the wide stop means small position sizes — correct, since the strategy's power is duration, not leverage.
Risk management
Expect ~35–45% win rates carried entirely by outlier winners. The discipline being tested is holding, not picking.
Evidence & backtesting
Decades of academic and CTA evidence support time-series momentum across assets — and it still underperforms buy-and-hold in relentless bull markets, as the preset backtest will happily show you. Every strategy here maps to this platform's Backtest panel — the matching Strategy Preset fills entry/exit/stops in one click, and every result is benchmarked against buy-and-hold, which most simple strategies LOSE to on strong trenders. Seeing that honestly is the lesson.