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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 CF?

ADX: trade only in strong trends does not beat buy-and-hold on CF: -12.2 points a year over 21 years.

Total return
529.6%
Buy and hold
×59
CAGR
9.2%
Sharpe
0.31
Max drawdown
-75.8%
Trades
667
Out of sample
overfit
Years
21
1×10×59×20062008201020122014201620182020202220242026
StrategyCF

Findings

  1. ADX: trade only in strong trends does not beat buy-and-hold on CF: -12.2 points a year over 21 years.
  2. Against the S&P 500 over the same window: -1.9 points a year.
  3. Total return +529.6% versus ×59 for buy-and-hold, with 667 trades.
  4. The result does not hold out of sample: it is overfit.
  5. Maximum drawdown -75.8%.
  6. It beats in neither half of the history (split at 2016).
  7. It ranks #34 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 CF 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 CF?. Daily backtest 1962-01-01–2026-08-31, artifact 5bea546c394a. https://finaxion.app/en/research/adx-trend-filter/cf

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