You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.ĬMC Markets UK plc (173730) and CMC Spreadbet plc (170627) are authorised and regulated by the Financial Conduct Authority in the United Kingdom. 74% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Therefore, the method is more likely to be used in conjunction with other strategies to help boost the returns. This data indicates that it is possible to make money using the method, but the returns tend to be inferior to even a buy-and-hold strategy. Winning trades were marginally more profitable than losing trades. Buying on the golden cross produced a profit just over 60% of the time, and lost money just under 40% of the time. In another study conducted by the Chart Report, covering a period from 1896 to mid-2016, it was found that the average return on a golden cross was 2.12% three months after the signal occurred, and 3.43% six months after the signal. Buying and holding the same fund over the same period would have returned 263%. In one backtesting study by the Trade Risk, covering a period from 2000 to 2020, the strategy returned more than 118%. Most have looked at buying an index fund or ETF, like the S&P 500, when a golden cross occurs, and then selling when the death cross occurs (without shorting). Several studies have been conducted on these crossover signals.
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