Do popular trading strategies work? We backtested them.
Golden crosses, Turtle breakouts, the Minervini trend template, Weinstein stages, earnings gaps and more, each tested on thousands of US stocks since 2018. Most did no better than picking a stock at random. Here is every result, including the ones that failed.
How we test
Against random picks. Every signal is compared with random stocks bought on the same day and held the same way.
Costs included. A round trip trading cost is taken off every trade.
Rules set first. Rules are written down before we look, then checked once on recent months held back.
Real stocks. Liquid US stocks above $10, including companies that later stopped trading.
Every result
| Strategy | Category | Verdict | Key result | Details |
|---|---|---|---|---|
| Momentum Leaders (12 month strength) | Momentum | Positive | +1.07% a month over the average stock; volatile, not yet conclusive | |
| Golden cross | Chart setups | No edge | 0.40% behind the average stock over 60 days; flipped in the last 18 months | Read the test |
| Death cross as a sell signal | Chart setups | No edge | Stocks did 0.67% better afterwards, not worse | Read the test |
| Turtle trading, 20 day breakout | Chart setups | No edge | 0.26% behind per trade, 40% winners | Read the test |
| Turtle trading, 55 day breakout | Chart setups | No edge | 0.46% behind per trade, 40% winners | Read the test |
| Weinstein Stage 2 breakout | Chart setups | Did worse | 4.1% behind SPY over 26 weeks | Read the test |
| Minervini trend template | Chart setups | No edge | +0.09% over 20 days, the same as random picks | Read the test |
| Tight range breakout (VCP style) | Chart setups | No edge | 0.10% behind over 10 days | Read the test |
| 52 week high breakout on volume | Chart setups | No edge | 0.05% behind over 20 days | Read the test |
| RSI(2) pullback | Chart setups | Mixed | 66% winners but 0.04% behind; better in the last 18 months | Read the test |
| Bounce off the 50 day average | Chart setups | No edge | 0.05% behind over 10 days | Read the test |
| Pullback and curl | Chart setups | No edge | 0.09% behind over 10 days | Read the test |
| Volume shock breakout | Chart setups | No edge | 0.31% behind over 10 days; flipped in the last 18 months | |
| Power earnings gap, mid caps | Earnings | No edge | 0.26% behind over 20 days | Read the test |
| Power earnings gap, S&P 500 | Earnings | No edge | 0.21% behind over 20 days | Read the test |
| Beat and popped 3% or more | Earnings | No edge | +0.50% over 20 days, not different from random picks | Read the test |
| Earnings surprise drift | Earnings | No edge | 1.71% behind over 60 days in the last 18 months | Read the test |
| Beat but sold off | Earnings | No edge | Bounced no more than other dips in the same stocks | Read the test |
| Strong on its own (residual momentum) | Momentum | Mixed | Passed at first, not confirmed in the last 18 months | |
| Correction deniers | Momentum | Did worse | 1.80% behind over 20 days | |
| Holding up on down days | Momentum | No edge | 0.35% behind over 20 days | |
| Hot industries | Momentum | Did worse | Leaders lagged the average stock the next week | |
| Highest buyback yield, S&P 500 | Fundamentals | No edge | +0.12% a month over the average member, not different from luck | Read the test |
| Shrinking share count | Fundamentals | No edge | +0.10% a month, ahead in 52 of 89 months | Read the test |
| Biggest stock issuers | Fundamentals | Did worse | 0.31% a month behind the average member | Read the test |
| Heavy buyers after the buyback blackout | Fundamentals | No edge | Did no better once their buyback window opened | Read the test |
| Dip below the buyback price | Fundamentals | No edge | Trailed similar dips by 0.38% over 20 days | Read the test |
| AI headline scoring | News and AI | No edge | Prices moved before the next open | |
| Indicator model, next day direction | News and AI | No edge | 49.9% right, a coin flip |
Results are against the average eligible stock over the same days, after costs, from mid 2018 to May 2025, unless stated. The most recent 18 months are held back and checked separately.
Backtest questions
Why do most popular trading strategies fail?
Anything a screener can find in seconds is found by everyone. Once a pattern is widely traded, the extra return tends to disappear. In our tests, most chart setups did about the same as picking a stock at random on the same day.
What did work?
Buying the stocks with the strongest gains over the last 12 months, leaving out the most recent month, held up best. It beat the average stock in our data, though with large swings from month to month.
Does a failed backtest mean a setup is useless?
Not always. Some setups are useful context for timing a trade in a stock you already like. They just did not beat the market on their own.
How do you test a strategy?
Every signal is compared with random stocks bought on the same day and held the same way, after trading costs. The rules are fixed before we look at results, and the most recent 18 months are held back and checked separately.
Backtest results are hypothetical. They are based on historical prices, include a simple trading cost and leave out taxes and other costs of real trading. Past results do not guarantee future returns. For informational and educational purposes only. Not investment advice, and not a recommendation to buy or sell any security.