Cup and Handle: does it work?
None of these versions passed. Sample: 135 completed trades over 2017-03-22 to 2025-03-14 (8.0 years).
The cup and handle, popularised by William O'Neil, is a bullish continuation pattern: a rounded base followed by a short pullback, then a breakout.
The rule we tested. A 12 to 35 percent deep cup, a handle in the upper half of the cup, enter on a break of the handle high, hold 20 days, on 40 US stocks. Patterns are found by rule, not by eye.
- Cup and handle: 12-35% cup, handle in the upper half, buy the handle-high break, 20-day hold (US stocks 1d x40) (40 US stocks (AAPL, NVDA, AMZN, GOOGL, …)), 2017-03-22 to 2025-03-14, costs 0.05% per side: −16.7 pts/yr vs the benchmark across 135 completed trades, unadjusted p=1.000, BH-adjusted q=1.000: did not beat the benchmark.
See a full worked example of one of these reads (free, no account)
Receipt: parameters, data, window and result file
- Run id
- t100-cup-s, run 2026-10-06
- Frozen parameters
- timeframe 1d; w=120, handle=10, minDepth=0.12, maxDepth=0.35, hold=20
- Data source
- vendor not recorded in the result file; data fingerprint sha256 7b5251fa65d8de0e...
- Instruments and coverage
- 40 assets: AAPL, NVDA, AMZN, GOOGL, META, TSLA, JPM, V, UNH, XOM, JNJ, COST and 28 more (full list in the result file). 9 corrupt vendor bar-day(s) across 9 assets were dropped, never repaired
- Date window
- 2017-03-22 to 2025-03-14 (discovery cutoff 2025-03-15)
- Sample
- 135 completed trades over 2017-03-22 to 2025-03-14 (8.0 years)
- Cost rule
- 0.05% per side; charged on every change in position/weight; benchmark pays none; no funding/borrow on shorts
- Fill rule
- not recorded
- Benchmark
- equal-weight long of the same assets, rebalanced daily across assets trading that day (no costs)
- Rule source (public)
- not published yet
- Run record (public)
- research/hunt2/ledger.jsonl, line with id t100-cup-s
- Full result file
- not published yet
None of these versions passed. US stocks −16.7 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000). None cleared our Benjamini-Hochberg q<0.10 bar once counted alongside every other rule we tested. That covers the versions, costs and benchmark described here, not every version of the rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
Failed: only the tested version above. Not tested: Hand-drawn patterns; other depths and hold times; crypto; volume confirmation. A result for the tested version says nothing about these.
This is one line in a bigger check. The research desk has run 694 strategies, most against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs). After correcting for how many we tried (Benjamini-Hochberg, 777 tests), 0 passed. That does not prove no strategy works, and it says nothing about versions we did not test. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Short answers: the verdict and the rule, as questions
Does the cup and handle pattern work?
None of these versions passed. US stocks −16.7 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000). None cleared our Benjamini-Hochberg q<0.10 bar once counted alongside every other rule we tested. That covers the versions, costs and benchmark described here, not every version of the rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
What exact rule did Tickfloor test?
A 12 to 35 percent deep cup, a handle in the upper half of the cup, enter on a break of the handle high, hold 20 days, on 40 US stocks. Patterns are found by rule, not by eye.
Is the sample big enough to trust?
No. This rule fired only 135 times across the 40 stocks, so a result this size is a small sample and cannot be told apart from luck. Treat the number as a hint at best, not as proof that the cup and handle works or fails.
Is this financial advice?
No. This measures a publicly claimed strategy rule, not a recommendation. General information only, not personal advice.
See the full numbers on the Top 100 retail strategies family page, or the full method and every result.