No real edge (no gross edge)

A strategy has an edge when its rules beat a random coin-flip entry on the same bars, before a cent of cost comes off. No gross edge means the signal never predicted anything. The entries were noise dressed as logic.

This is the single most common reason we reject a strategy, and it's the finding people least expect. Nearly half of everything we throw out failed right here, before slippage or spread entered the math. The popular story is that costs kill strategies. Mostly they don't get the chance. Most rejected systems were never alive.

Testing for it is mechanical. Take the strategy's exact number of trades, its exact holding pattern, its exact market exposure, and swap the entry logic for a coin flip. Run that a few thousand times. If the real strategy's return sits inside the pile of random outcomes instead of clear above it, the rules added nothing. Whatever the equity curve looks like, it isn't forecasting.

This is a different failure from trend-beta, where a strategy does clear the random bar but only because it was quietly long a market that went up. No gross edge is starker: the strategy can't even clear that low bar. There's no signal to explain away, because there was never a signal.

Noise passes for edge more easily than it should, because testing enough rule variants against the same history guarantees a few will beat random by chance alone. That's multiple testing at work. Tune the parameters until one of those flukes fits the data perfectly and you've drifted into overfitting. Shuffle the price series and rerun the rule, a placebo test, and a strategy with no real edge performs just as well on fake data as on real data. That's the tell.

When you strip the equity curve back to whether the rule actually forecast the next move, the answer is usually no. Costs get blamed because they're easy to see on a spreadsheet. The absence of a real signal is harder to admit, so it rarely makes the pitch.