Strategy guide
SMA Crossover Backtesting Guide
A sma crossover uses two simple moving averages with different lookback periods. Backtesting can measure its historical behavior under explicit assumptions, but cannot establish that it will be profitable in the future.
Turn the concept into rules
Specify the fast and slow SMA lengths, signal timing, position size, and exit logic. Decide how repeated or conflicting signals are handled before running the test.
Test realistic execution
Apply the signal only after its inputs are known. Include fees, spread, and slippage; test whether results survive less favorable execution assumptions.
Evaluate robustness
Compare nearby parameter values, multiple market regimes, and an unseen period. Review drawdown, trade count, exposure, and benchmark-relative behavior alongside return.
Research checklist
- fast and slow SMA lengths
- Entry and exit timing
- Costs and turnover
- Regime and out-of-sample stability
Questions and answers
How do I backtest a SMA Crossover?
Define every rule and parameter, run it chronologically on suitable historical data, subtract realistic costs, and evaluate it on unseen periods as well as the development sample.