Guide · Breakouts & channels
Does Acceleration Bands work?
Across 375 stocks, Acceleration Bands cut the worst fall on 97%, beat buying and holding on risk-adjusted return on 6% and on raw return on 8%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
Bands that widen with each day's range. Headley says two closes in a row above the upper band mark a stock that is accelerating, and the first close back inside says the run is probably over.
- In after two closes in a row above the upper band (the 20-day average of high × (1 + 4 × (high − low) ÷ (high + low))).
- Out on the first close back below the upper band.
Breakouts & channels plays bet that when price escapes the range it has held for weeks, the move that follows tends to run. The family guide
How to use it
- It trades often (about 8 switches a year per stock), so costs, spreads and taxes eat into it more than the backtest's 0.05% per switch suggests.
- Expect to be wrong more often than right: only 28% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It sits in cash much of the time (holding on about 8% of days), so judge it on risk-adjusted return rather than on matching a rising market.
- It worked best on Indexes & ETFs (14% beat holding on risk-adjusted return) and worst on Micro caps (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Acceleration Bands did best against holding in the 2008 crash (+41% median gap) and worst in the 2020–21 rally (−45%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Acceleration Bands | +41% | −17% | +26% | −45% | +18% | −14% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Indexes & ETFs | 14% | -0.47 |
| Software & devices | 12% | -0.53 |
| Healthcare | 11% | -0.48 |
| Industrials & rentals | 11% | -0.33 |
| Financials | 8% | -0.35 |
| Energy & power | 7% | -0.47 |
| Industrials & materials | 6% | -0.52 |
| Semiconductors | 4% | -0.77 |
| Metals & mining | 4% | -0.59 |
| Sectors | 0% | -0.55 |
| Big tech | 0% | -0.64 |
| Consumer & retail | 0% | -0.64 |
| Media & telecom | 0% | -0.57 |
| Real estate | 0% | -0.44 |
| Micro caps | 0% | -0.22 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Acceleration Bands holds 14 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.