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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 DLR?

ADX: trade only in strong trends does not beat buy-and-hold on DLR: -18.9 points a year over 22 years.

Total return
-19.5%
Buy and hold
×36
CAGR
-1.0%
Sharpe
-0.11
Max drawdown
-80.3%
Trades
661
Out of sample
overfit
Years
22
1×10×20052007200920112013201520172019202120232025
StrategyDLR

Findings

  1. ADX: trade only in strong trends does not beat buy-and-hold on DLR: -18.9 points a year over 22 years.
  2. Against the S&P 500 over the same window: -12.2 points a year.
  3. Total return -19.5% versus ×36 for buy-and-hold, with 661 trades.
  4. The result does not hold out of sample: it is overfit.
  5. Maximum drawdown -80.3%.
  6. It beats in neither half of the history (split at 2015).
  7. It ranks #184 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 DLR 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 DLR?. Daily backtest 1962-01-01–2026-08-31, artifact 5bea546c394a. https://finaxion.app/en/research/adx-trend-filter/dlr

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