The best indicator for Financials (XLF)
We backtested 20 indicators across daily, weekly and hourly charts on real Financials (XLF) history. Here's what actually worked — risk-adjusted, out-of-sample, with costs.
SMA 50/200 Cross
On the daily chart, this is the strongest risk-adjusted edge we found for Financials (XLF) over ~27.4 years — trailing buy-and-hold by 0.8% CAGR.
The winner on each chart
Every indicator, ranked
Ranked by Sharpe (risk-adjusted return). Hypothetical, fees included.
| # | Indicator | TF | CAGR | Sharpe | Max DD | Win | Trades | vs B&H |
|---|---|---|---|---|---|---|---|---|
| 1 | SMA 50/200 Cross ✓ | Daily | 5.0% | 0.39 | -48.3% | 47.1% | 17 | -0.8% |
| 2 | Donchian Breakout ✓ | Weekly | 4.2% | 0.39 | -26.2% | 63.2% | 19 | -1.5% |
| 3 | EMA 50/200 Cross ✓ | Daily | 4.1% | 0.34 | -35.4% | 47.1% | 17 | -1.7% |
| 4 | RSI Mean-Reversion ✓ | Daily | 3.7% | 0.31 | -54.1% | 81.6% | 38 | -2.1% |
| 5 | EMA 20/50 Cross ✓ | Daily | 3.4% | 0.29 | -43.0% | 37.1% | 62 | -2.4% |
| 6 | Bollinger Mean-Reversion ✓ | Daily | 3.5% | 0.28 | -41.0% | 76.9% | 121 | -2.3% |
| 7 | CCI ✓ | Daily | 3.7% | 0.28 | -60.0% | 77.5% | 138 | -2.1% |
| 8 | Donchian Midline ✓ | Weekly | 3.2% | 0.28 | -41.4% | 46.6% | 73 | -2.5% |
| 9 | Stochastic ✓ | Daily | 3.1% | 0.26 | -44.4% | 67.2% | 125 | -2.7% |
| 10 | Bollinger Breakout ✓ | Weekly | 1.9% | 0.25 | -20.3% | 66.7% | 24 | -3.8% |
| 11 | RSI Trend (>50) ✓ | Weekly | 2.1% | 0.22 | -44.8% | 49.4% | 81 | -3.6% |
| 12 | MACD ✓ | Weekly | 2.1% | 0.21 | -58.6% | 47.5% | 59 | -3.5% |
| 13 | EMA 20/50 Cross ✓ | Weekly | 1.8% | 0.2 | -43.8% | 46.7% | 15 | -3.8% |
| 14 | Bollinger Mean-Reversion ✓ | Weekly | 1.9% | 0.19 | -63.0% | 71.4% | 21 | -3.7% |
✓ = held up out-of-sample. Hypothetical, costs included. See methodology.
For Financials (XLF), SMA 50/200 Cross on the daily timeframe gave the best balance of return and risk in our test. It still trailed buy-and-hold on raw return — but remember: this is a hypothetical backtest of a standard rule, not a recommendation. Markets change. See the methodology and disclaimer.
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