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Finaxion Research · Smart Money: the liquidity sweep · single stocks · Recomputed 2026-09-10

Does Smart Money: the liquidity sweep work on MA?

Smart Money: the liquidity sweep does not beat buy-and-hold on MA: -29.4 points a year over 20 years.

Total return
-29.8%
Buy and hold
×142
CAGR
-1.7%
Sharpe
-1.09
Max drawdown
-30.3%
Trades
74
Out of sample
overfit
Years
20
1×10×100×2007200920112013201520172019202120232025
StrategyMA

Findings

  1. Smart Money: the liquidity sweep does not beat buy-and-hold on MA: -29.4 points a year over 20 years.
  2. Against the S&P 500 over the same window: -13.0 points a year.
  3. Total return -29.8% versus ×142 for buy-and-hold, with 74 trades.
  4. The result does not hold out of sample: it is overfit.
  5. Maximum drawdown -30.3%.
  6. It beats in neither half of the history (split at 2016).
  7. It ranks #164 of 227 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 2544360d2bb7.

Exactly what was tested

Mechanical approximation: 25-bar low pierced with a close back above it on the same bar → entry; exit after 20 bars.

How to read it

The verdict compares the strategy with buying and holding MA 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)

Every strategy on MA → · Full page for Smart Money: the liquidity sweep →

How to cite

Finaxion Research (2026). Does Smart Money: the liquidity sweep work on MA?. Daily backtest 1962-01-01–2026-08-31, artifact 2544360d2bb7. https://finaxion.app/en/research/liquidity-sweep/ma

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