[Summary]
A golden cross is when the short-term moving average exceeds the long-term moving average.
What is more likely to fail in Golden Cross is not the lack of knowledge itself, but the fact that you end up justifying your hasty decisions afterwards.
In actual investment, we start by using it to confirm trend reversals. However, we cannot overlook the fact that it is a late sign and may result in a high price grab.
In this article, we will organize the Golden Cross not as "knowledge" but as a step to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First, separate with the golden cross
When looking at Golden Cross, first decide what you want to judge. The information you need changes depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. The Golden Cross is not the only material used to make decisions. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Situations where Golden Cross is likely to fail
If you look at the Golden Cross as a failure pattern, first make a narrow premise. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
If you check the following points, things will be much more organized.
| Axis to check | What to see at Golden Cross |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
It's not only when you lack knowledge that you stumble with the Golden Cross. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Don't decide whether to buy or sell the moment you see the Golden Cross.
- Do not mix the time frame that suits the Golden Cross with your own holding period.
- Don't increase your position to recoup your losses
- Don't make a decision just based on SNS or rankings.
The important thing here is not to decide on just one correct answer based on the Golden Cross. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Please check these 5 things at least before using Golden Cross as a basis for your actual judgment.
- Can you explain in one sentence the purpose of watching Golden Cross?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of checking the golden cross is not to speed up your actions, but to reduce unnecessary errors in judgment.
Summary
The Golden Cross is a material for organizing investment decisions. Even if you read it as a failure pattern, treating it as a standalone buy/sell signal will lead to poor judgment.
The points to keep in mind are as follows.
- Decide first the purpose of seeing the Golden Cross
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat the Golden Cross as a tool to pause before buying or selling, rather than a word that forces you to make a hasty decision.