Trend following

Does the 20/50 moving-average crossover work on NIFTY?

NIFTY · May – Dec 2023 · 44 trades · spot

Disclaimer: For educational purposes only. These are backtested past results, not investment advice. Trading involves risk, and past performance does not guarantee future returns.

query › "Backtest a 20/50 SMA crossover on NIFTY."

+9.0%

Return

45%

Win rate

Trades

−3.8%

Max drawdown

0.35

Sharpe

Equity (points · spot)

The 20/50 crossover is where every trader starts: go long when the fast average crosses above the slow one, exit when it crosses back. Does it actually work on NIFTY?

Over roughly eight months of 2023 and 44 trades, it returned +9%. But the headline hides how it got there.

Boring, then explosive

For the first five months it chopped sideways and even bled ~4% in drawdown — the classic whipsaw of a crossover in a range-bound market. Then a sustained trend late in the year produced almost the entire gain in one stretch.

The trend-following tax

A 45% win rate and months of chop are the price of admission. Crossovers make their money in a handful of strong trends — bail during the boring drawdowns and you miss the payoff entirely.

Takeaway

Crossovers work — but only if you can sit through long flat stretches to catch the rare trend. Most people can't. That discipline is the actual edge.

Want to stress-test your own version — change the entry time, the stop, the trail?

New to this? Read the guide on how to backtest trading strategies, or see how options backtesting works.