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Finaxion Research · ADX: trade only in strong trends · single stocks · Recomputed 2026-09-10

Does ADX: trade only in strong trends work on ALL?

ADX: trade only in strong trends does not beat buy-and-hold on ALL: -11.2 points a year over 33 years.

Total return
12.3%
Buy and hold
×38
CAGR
0.4%
Sharpe
-0.09
Max drawdown
-75.6%
Trades
1116
Out of sample
overfit
Years
33
1×10×19941997200020032006200920122015201820212024
StrategyALL

Findings

  1. ADX: trade only in strong trends does not beat buy-and-hold on ALL: -11.2 points a year over 33 years.
  2. Against the S&P 500 over the same window: -10.5 points a year.
  3. Total return +12.3% versus ×38 for buy-and-hold, with 1116 trades.
  4. The result does not hold out of sample: it is overfit.
  5. Maximum drawdown -75.6%.
  6. It beats in neither half of the history (split at 2010).
  7. It ranks #140 of 235 markets for this strategy by annual excess over the S&P 500.

Findings derived from the full panel. Each carries its number and its denominator; the computations are reproducible with artifact 5bea546c394a.

Exactly what was tested

Long while +DI(14) is above −DI(14); flat when −DI overtakes +DI. Next-close execution.

How to read it

The verdict compares the strategy with buying and holding ALL over the same window, with round-trip costs per asset class. “Out of sample” is walk-forward: the rule is fit on one stretch and judged on the next. A result that beats in the full sample but not out of it is overfit. Full methodology in the protocol. How we test.

Open this backtest with its trades   Trades (CSV)

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How to cite

Finaxion Research (2026). Does ADX: trade only in strong trends work on ALL?. Daily backtest 1962-01-01–2026-08-31, artifact 5bea546c394a. https://finaxion.app/en/research/adx-trend-filter/all

Not a recommendation. Past performance does not guarantee future results.