Viral Reddit Trading Strategy Test Fails: -35% Drawdown on COIN Amid Positive Market Returns

On November 18, 2025 (EST), a Reddit post [1] reported the results of testing a viral trading strategy that claimed to generate $321,480 in profit between July and December 2024 using SMA10 + MACD on 5-minute charts for COIN, SPY, QQQ, and other assets [3]. The test, conducted with identical symbols, period, and realistic slippage/commissions, resulted in a -35% drawdown on COIN, negative Sharpe ratios across all symbols, and no statistical edge identified [1].

While the event does not have direct short-term market impact, it undermines trader sentiment toward unvalidated viral strategies:

• Sentiment Shift
  : The failed test reduces confidence in viral trading approaches, especially for high-volatility assets like COIN [0][1].
• Volatility Link
  : COIN’s 5.74% daily volatility [0] amplified drawdowns even though the asset’s period return was +9.87% [0].
• Strategy Flaws
  : SPY (+7.41% return) and QQQ (+6.50% return) with lower volatility failed to offset strategy weaknesses, indicating fundamental flaws in the mechanical rules [0].

• COIN: -35% drawdown
• All symbols: Negative Sharpe ratios
• No statistical edge identified
  Source: [1]

1. Directly Impacted
   : COIN (high volatility), SPY (index ETF), QQQ (tech ETF) [0]
2. Related Sectors
   : Crypto (COIN), Technology (QQQ), Broad Market (SPY) [0]

• Missing strategy parameters (MACD settings, stop-loss rules) due to blocked Reddit posts [1][2]
• Unknown details of original claim (initial capital, transaction cost treatment) [3]

• Transparency Risk
  : Viral strategies often omit critical details (slippage, commissions) leading to overstated results [1][3]
• Volatility Risk
  : High volatility assets like COIN can erase gains even in rising markets [0][1]
• Validation Risk
  : Lack of rigorous backtesting in popular strategies may lead to unexpected losses [1]

• Full parameter disclosure for validated backtests [1][2]
• Volume spikes in COIN, SPY, QQQ if traders adopt similar strategies [0]
• Robust risk management rules for high-volatility assets [0]