Cumulative Return Bounds and Tests of Technical Trading Rules

Summary

This paper derives and proves an upper bound for cumulative returns in trading series, then evaluates conventional technical trading rules across developed and emerging stock markets. Its framing addresses an enduring question: whether these rules can generate returns that outperform the market. The analysis uses bootstrap methods to investigate their profitability and compares their results with a random trading strategy.

The reported findings suggest that technical rules struggle to beat the market and may perform worse than random trading. This provides a caution against treating familiar indicators or rules as evidence of a reliable edge. The available description does not specify the rules tested, the markets or sample periods in detail, transaction costs, or how the cumulative-return bound is constructed. Those omissions limit assessment of robustness and practical tradability; the reported comparisons should be understood as results for the study’s chosen settings, not a universal verdict on every technical strategy.

Key ideas

• The paper establishes an upper bound for cumulative returns in trading series.
• It evaluates conventional technical trading rules on developed and emerging stock markets.
• Bootstrap methods are used to assess rule profitability.
• The reported results indicate that the tested rules have difficulty outperforming the market and may trail random trading.

Tags

# On the Bound of Cumulative Return in Trading Series and the Verification Using Technical Trading Rules


# On the Bound of Cumulative Return in Trading Series and the Verification Using Technical Trading Rules









Although there is a wide use of technical trading rules in stock markets, the profitability of them still remains controversial. This paper first presents and proves the upper bound of cumulative return, and then introduces many of conventional technical trading rules. Furthermore, with the help of bootstrap methodology, we investigate the profitability of technical trading rules on different international stock markets, including developed markets and emerging markets. At last, the results show that the technical trading rules are hard to beat the market, and even less profitable than the random trading strategy.

Shown in full with attribution under the source's licence. Licence: abstract CC0

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.