TheFinSense’s Trading Edge series debunks retail trading-rule lore with cost-adjusted expected value math. Each article tests a popular technical signal — moving average crossovers, golden cross, candlestick patterns, support and resistance, trendline survivorship — against academic literature (Brock-Lakonishok-LeBaron 1992, Bajgrowicz-Scaillet 2012, Sermpinis 2019, Barber-Odean 2000) and three-regime cost models. Result: most “edges” lose to passive buy-and-hold once round-trip costs, turnover frequency, and tax friction compound over 25-35 years. Math beats intuition. Every time.
Technical analysis works only when a backtested rule survives data-snooping correction, realistic transaction costs, and out-of-sample testing.
Technical Analysis Works Only Under 3 Conditions Read More »
