Golden Cross Trading Strategy Guide

Contents
About the Author ......................................................................................................................................................3

Introduction ............................................................................................................................................................... 4

What is a Golden Cross and how does it work? ................................................................................................. 5

Is there anything magical about the 50 and 200-day moving average?.................................................... 6

How NOT to trade the Golden Cross ................................................................................................................... 7

How to use the Golden Cross and increase your winning rate ...................................................................... 8

How to use the Golden Cross and increase your winning rate - for stock trading ................................... 10

But does the Golden Cross really work? ............................................................................................................ 11

Golden Cross Trading Strategy: How to better time your entry using this ONE simple technique ..... 12

How to ride MASSIVE trends with the Golden Cross....................................................................................... 14

Conclusion ................................................................................................................................................................ 15

Do you want more stuff like this? ....................................................................................................................... 15

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 Golden Cross Trading Strategy Guide

About the Author

Hi, my name is Rayner Teo.

I’m not a multi-millionaire trader, I don’t drive fancy cars, and I don’t live in a
penthouse.
But I am an independent trader, an ex-prop trader, and the founder of
TradingwithRayner.
I specialize in studying great research (from people much more qualified than me)
and applying it to the real-world of trading to find out what works and what doesn’t.
And finally, share them with traders like you so you can become a consistently
profitable trader.
Cheers,

Rayner Teo

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 Golden Cross Trading Strategy Guide

Introduction
Have you heard of the Golden Cross signal?
If you listen to the media, you’ll hear about the Golden Cross (like how the market is
bullish when it occurs).
But is it true?
Well, that’s what you’ll learn today…
Specifically, I’ll cover:

• What is the Golden Cross and how does it work

• How NOT to trade the Golden Cross
• How to use the Golden Cross and improve your winning rate
• Golden Cross: How to better time your entry with this ONE simple technique
• How to ride long-term trends with the Golden Cross
Or if you prefer, you can watch this training video below…

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What is a Golden Cross and how does it work?

The Golden Cross is a bullish phenomenon when the 50-day moving average crosses
above the 200-day moving average.
Here’s why…
When the market is in a long-term downtrend, the 50-day moving average is below
the 200-day moving average.
However, no downtrend lasts forever.
So, when a new uptrend begins, the 50-day moving average must cross above the
200-day moving average — and that’s known as the Golden Cross.
An example of a Golden Cross chart:

Pro Tip: The opposite is the Death Cross — when the 50-day moving average
crosses below the 200-day moving average.

Now some of you are probably wondering:

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Is there anything magical about the 50 and 200-day

moving average?
Nope.
There’s no magic to it.
You can use the 49-period and 199-period for all you want and it will not matter.
Why?
Because the concept is what matters (which is the short-term trend showing signs of
strength against the long-term downtrend).
The moving average is only a tool to define the trend.
Moving on…

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How NOT to trade the Golden Cross

Now I know what you’re thinking…
Let’s go long when the 50MA crosses above the 200MA and sell when it crosses below
— and make a ton of money!
Well, not so fast my young padawan.
Because in a range market, the Golden Cross will cause many losses (otherwise
known as a whipsaw).
Here’s an example:

So…
Unless you know what you’re doing, I don’t suggest “blindly” trading the Golden Cross.
Instead, there are better ways to trade it and I’ll tell you more in the next section.
Read on…

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How to use the Golden Cross and increase your

winning rate
Now…
If you’re the type of trader who always can’t seem to decide whether you should be
long or short, then this trading technique is for you.
Because the Golden Cross can act as a trend filter so you can trade on the right side
of the markets (and increase your winning rate).
Here’s how it works:
If the 50MA crosses above the 200MA, then you’ll look to long only.
Or if the 50MA crosses below the 200MA, then you’ll look to short only.
Here’s what I mean…
Look for long setups when the 50-day crosses above the 200-day Moving Average:

Look for short setups when the 50-day crosses below the 200-day Moving Average:

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Now, don’t get me wrong.

It doesn’t mean go long immediately when the 50MA cuts above the 200MA.
Instead, it means you have the “permission” to look for long trading opportunities
when the 50MA cuts above the 200MA — a big difference.
For example:
If a Golden Cross occurs, then you can look for bullish trading setup like a Flag Pattern,
False Break, Triangles, etc (which I’ll cover more later).
Does it make sense?
Great!

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How to use the Golden Cross and increase your

winning rate - for stock trading
Earlier, the examples used were for the Forex and Futures market.
But for stocks, it’s different.
Because individual stocks are “influenced” by its respective stock index.
For example:
Yangzijiang would be affected by what STI is doing rather than S&P 500.
That’s why you get the saying…
“A rising tide lifts all boats.”
In essence, if the index is bullish, then chances are the stock will move higher.
So how do you apply the Golden Cross to stock trading?
Simple.
You overlay the Golden Cross to the stock index.
For example:
If a Golden Cross occurs on the S&P 500, then it means you want to be bullish on
stocks within the S&P 500 index.

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But does the Golden Cross really work?

Check this out…

Source: http://ritholtz.com/2012/01/how-bullish-is-the-golden-cross/

This shows the returns after 1 month, 2 months, 3 months, 6 months, and 1 year after
the Golden Cross occurs on the S&P.
Clearly, the Golden Cross has a positive bias, and the market is likely to head higher
after it occurs.
And in the next section, you’ll learn how to better time your entry when trading the
Golden Cross.
Read on…

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 Golden Cross Trading Strategy Guide

Golden Cross Trading Strategy: How to better time

your entry using this ONE simple technique
Now, you don’t want to go long just because you spot a Golden Cross.
Why?
Because you could be entering when the market is “overextended” — and about to
reverse lower.
The solution?
You can use multiple timeframes to better time your entry.
Here’s how it works:
1. Identify a Golden Cross on the higher timeframe
2. Look for a trading setup on the lower timeframe (like Ascending Triangle, Bull
Flag, etc.)
Here’s an example:
A Golden Cross on Daily timeframe…

A Bull Flag pattern on the 4-hour timeframe…

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The beauty of this method is you’ll have a better entry, tighter stop loss and a more
favorable risk to reward.
But the downside is you might miss the move if can’t find a valid trading setup.

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How to ride MASSIVE trends with the Golden Cross

Here’s a fact:
If you want to ride massive trends in the market, you cannot have a target profit.
Because a target profit limits your profit potential?
It’s like saying…
“Hey Mr. Market, don’t give me too much profits. I’ve had enough.”
Instead… You must trail your stop loss.
This means as the market moves in your favor, you’ll “lock in” your gains but still give
your trade room to breathe — should the price moves further in your favor.
And one way to go about it is using the Golden Cross as a trailing stop loss.
Here’s how…
If you’re in a long trade and the market moves in your favor, then you’ll hold the trade
till the 50-day crosses below the 200-day Moving Average. Here’s what I mean…

Now I’ll be honest.

A trailing stop loss is not easy to execute.
Because often, your winners will become losers as you try to ride the trend — and
that’s the price you must pay.

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Conclusion
So, here’s what you’ve learned today:
• A Golden Cross occurs when the 50-day crosses above the 200-day moving
average (and vice versa for a Death Cross)
• Be careful of “blindly” trading the Golden Cross because the market can
whipsaw you
• You can use the Golden Cross as a trend filter, look to buy only when the 50-
day is above the 200-day moving average
• You can ride massive trends with the Golden Cross and exit your trade only
when the 50-day crosses below the 200-day moving average

Do you want more stuff like this?

Then check out my website, TradingwithRayner because you’ll learn

new trading strategies and techniques to level up your trading.
There’s no hype or fluff but only the good stuff.
Here’s the link: www.tradingwithrayner.com

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