FAILED

Divergence Index (10/40/1.0, squared deviation)

The distance between two moving averages measures how far price has strayed from its own equilibrium, but that distance means different things in calm and in agitated markets. Dividing it by volatility and comparing it against bands that also adjust yields a departure that is comparable over time — and an extreme departure against the trend is a chance to enter with the trend, not a reversal signal.

Measured in crypto — Binance spot · 540 pairs, delisted ones included · 0.2% per round trip

Net per trade

−4.28%

after fees

The fee is charged on both legs: every trade pays to open and pays to close.

Died at

costs

the 0.20% fee eats the whole edge

Worst drawdown

−100%

2,821 days underwater

How far the account fell below its own best previous moment.

Timeframe

1 day

The time grid this was measured on. The same technique on a coarser or finer grid is a different measurement, and can earn a different verdict.

invariance
costs
placebo
benchmark
out of sample
multiple testing

Equity curve

Risking 1.0% per trade, marked to market every day — not only when a trade closes. The line at 1.0 is the capital it started with.

At its worst the account was worth 100% less than its own best previous moment, and it spent 2,821 days below that peak.

The technique against chance

Same number of trades, same holding time, same assets — only the dates were drawn at random.

The average trade and the typical one

The mean sits BELOW the median: most trades win a little and the tail loses a lot. It is the lottery inverted, and no less dangerous — what decides the outcome is the rare loss.

What was measured

We coded the rule exactly as it is described and let it trade on its own from 2017-08-17 to 2026-07-28. It found trades in 512 coins, 2,757 in total. Each one enters and exits at the price that existed on that day — the program never sees what comes next, which is the most common mistake people make testing strategies at home. Wherever the description was ambiguous we took the reading least favourable to the technique; whatever was left open is stated in the hypothesis, at the foot of this page.

How many of those trades actually count

Only 127 of the 2,757. Cryptocurrencies rise and fall almost in unison, so the same rule fires on dozens of coins on the same day — and that is one bet repeated, not dozens of different bets. Counting them all separately is the trick that makes a bad test look impressive.

What it paid, before any deductions

-4.08% per trade. Look at the sign: the average is already negative before any fee is taken out. The controls below still hold, but here they are not knocking down an edge — they are confirming there never was one.

Why it did not pass — it died here · the broker's fee

We subtract the fee the broker charges to open and to close each trade — every trade pays on both legs. The edge existed on paper and vanished at that subtraction. A result that only survives without the fee does not survive in the real world.

What would have happened to the money

Risking 1.0% of capital per trade — the most widely taught rule — across the whole period: The account would have been wiped out. At its worst the account was worth 100% less than its own best previous moment, and it spent 2,821 days below that peak. In 12 of the 12 paths tested, the account fell to less than half of what it started with.

The account would not fit every signal

91% of the trades had to be turned down: by the time they appeared, the money was already tied up in other positions. That matters because the average return per trade the technique claims is computed over trades that nobody could have taken all of.

What this result does NOT say

For an edge to be assertable here it would have to reach 4.54% per trade — that is the size that survives this archive's multiple-testing correction, and it rises as the archive grows. So FAILED means “we found nothing above that size”, and never “it cannot possibly work”. The instrument is far more sensitive than that: on synthetic data, with a clean effect, it separates from 0.69% upwards. The distance between the two numbers is the price of a real market and the price of publishing many claims. The difference matters, and it is the rule of this house: the card confronts the claim, never the person who made it.

What this card does not measure

Every verdict holds for the conditions it was measured under. These are this card's — and outside them the result does not apply.

One market, one universe: Measured on 512 spot cryptocurrency pairs, delisted ones included. It says nothing about futures, equities or indices, nor about how the same technique behaves in another market.
One window of time, not every window: The measured period runs from 2017-08-17 to 2026-07-28. A market moves through regimes, and a technique can work in one and fail in another — the card measures the regimes that fit inside this window, not the ones still to come.
One cost structure: The cost charged is 0.10% per leg, in and out. Anyone paying more than that gets a worse result, and anyone paying less gets a better one — the verdict holds for this fee.
One exit rule: The trade was closed by: the technique itself (held until the opposite signal). The same entry measured with a different exit is a different strategy, and can earn a different verdict — it happens in this archive.
The number of trades is not the sample size: There are 2,757 trades, but only 127 independent market episodes: a single move fires the technique across dozens of assets at once, and counting those as separate observations inflates any result. It is the smaller number that governs the arithmetic. With 127 episodes, what the data supports is a range from -11.14% to +2.97% per trade — the published average is the centre of it, not the exact measurement.
Daily bars: Measured at the daily close. Nothing here measures what happens inside the day, and an intraday technique is not auditable with this data.

Numbers and reproducibility

The six controls

control	status	t	threshold	episodes
invariance	passed	—	—	—
costs	failed	-1.20	1.98	127
placebo	failed	-1.21	1.98	127
benchmark	failed	—	—	—
out of sample	inconclusive	—	—	—
multiple testing	inconclusive	—	—	—

invariance2757 signals across 750934 barsconcentration: +25.57% of the profit sits in the top 5% of trades — with the dates shuffled, +42.18% (fails above +50.00%)
costsgross -4.084% · cost 0.200% · net -4.284% (t=-1.20)
placeboactual -4.284% · placebo +0.056% · excess -4.341% ± 3.598% (t=-1.21 against a threshold of 1.98, 127 real groups, 137,850 sham dates, draw error ±0.104%)
benchmarktechnique -4.28% · buy and hold (same horizon) +1.83% · excess -6.12%
out of sampleasset half A: -2.416% (t=-1.04, 121 episodes) · asset half B: -6.138% (t=-1.18, 115 episodes) · liquid half (>= US$ 2,107,235/day): -3.212% (t=-0.66, 121 episodes) · illiquid half: -5.392% (t=-1.38, 111 episodes) · period 1/4 (2018-03-17 a 2022-06-14): -16.845% (t=-2.37, 62 episodes) · period 2/4 (2022-06-20 a 2023-08-07): -1.068% (t=-0.51, 19 episodes) · period 3/4 (2023-08-08 a 2025-04-27): -2.967% (t=-1.15, 28 episodes) · period 4/4 (2025-04-28 a 2026-07-15): +3.455% (t=2.17, 20 episodes)
multiple testing2 variation(s) tested · t=-1.20 across 127 episodes (equivalent to t=-1.19) · p≈0.2342 · false positives expected by chance ≈ 0.47

Equity — outside the six controls, and here is why

The t of the trade series is invariant to bet size: 0.5%, 1% and 3% agree to the sixth decimal. Nothing here moves the verdict — it moves what the account would have lived through.

risking 1.0% per trade: ×0.00
worst drawdown from the peak: −100%
days below the previous peak: 2,821
signals refused for lack of capital: 91%
paths where the account halved (out of 12): 12

Reproducibility

period: 2017-08-17 to 2026-07-28
assets that traded: 512
variations tested before this one: 2
gross per trade: −4.08%
net per trade: −4.28%
exit rule: the technique itself (held until the opposite signal)
median duration bars: 23
mean duration bars: 29.9
max duration bars: 203
fee per leg: 0.001
episode days: 23
seed: 20260728
DI fast: 10
DI slow: 40
DI factor: 1.0
DI squared: 1.0

Binance spot klines (delisted pairs included) · collected from 2026-07-27 23:31 to 2026-08-03 10:49 · 540 assets · 750,934 bars · 2017-08-17 to 2026-07-28

Hypothesis, filed before the result

Difference between the 10- and 40-day averages, divided by the standard deviation of daily changes — a volatility adjustment. Bands at ±1.0 deviation of the index itself. The rule says 'buy when the index falls below the lower band WHILE IN AN UPTREND', and the source does NOT define the trend. The step is named and not defined; we will adopt the direction of the slow average and that goes declared as the auditor's choice. And there is an ambiguity in the printed formula: it is not clear whether the standard deviation enters squared. Both readings will be measured. Family prediction, filed before measuring: (1) the control that kills the most will be COST, and not invariance — unlike the `adaptativos` family, because these are discrete-signal oscillators, they turn over less and are not always in the market; (2) the DIVERGENCE techniques will come out mostly INCONCLUSIVE, because they require two aligned peaks and fire rarely; (3) none survives the family's Benjamini-Hochberg. I record that prediction (1) is the opposite of the one I made in `adaptativos` and that was confirmed there — if I get it wrong again in the same direction, that is a sign I am misreading the mechanism of cost, not the technique.

filed on 2026-07-31, before the number existed

The original, as it was filed

Diferença entre médias de 10 e 40 dias, dividida pelo desvio padrão das variações diárias — ajuste de volatilidade. Bandas em ±1,0 desvio do próprio índice. ⚠️ A regra diz 'compre quando o índice cai abaixo da banda inferior ESTANDO EM TENDÊNCIA DE ALTA', e a fonte NÃO define a tendência. O passo é nomeado e não definido; adotaremos a direção da média lenta e isso vai declarado como escolha do auditor. ⚠️ E há ambiguidade na fórmula impressa: não fica claro se o desvio padrão entra ao quadrado. As duas leituras serão medidas. Previsão da família, registrada antes de medir: (1) o controle que mais mata será o CUSTO, e não o invariante — diferente da família `adaptativos`, porque estes são osciladores de sinal discreto, giram menos e não são sempre-no-mercado; (2) as técnicas de DIVERGÊNCIA sairão majoritariamente INCONCLUSIVAS, porque exigem dois picos alinhados e disparam pouco; (3) nenhuma sobrevive ao Benjamini-Hochberg da família. ⚠️ Registro que a previsão (1) é o oposto da que fiz em `adaptativos` e que se confirmou lá — se eu errar de novo na mesma direção, é sinal de que estou lendo mal o mecanismo do custo, e não a técnica.

Pre-registration exists to keep prediction apart from rationalisation: written after the number, every hypothesis is right.

Earlier audits of the same technique

Each variation an author teaches enters as its own test, so that whatever might work in the strategy gets covered. The verdict held in all of them.

2026-08-03FAILEDopen ↗
2026-08-03FAILEDopen ↗
this measurement →FAILED