Buy and Hold
Buying an asset and keeping it through rises and falls, with no attempt to time entries or exits. In testing, it is the simplest benchmark for any active rule.
Buy and hold means buying once and holding for the whole period. There are no signals, no exits and few costs: the result is simply the asset's own return, including every drawdown along the way.
In systematic trading it matters mostly as a benchmark. An active rule on a single instrument should be compared with holding that same instrument over the same period. If the rule earns less after costs, it needs another justification, such as a smaller drawdown or less time exposed to the market, and that trade-off should be stated plainly.
Comparisons need care. A rule that is in the market half the time carries roughly half the exposure, so comparing total returns alone is unfair to both. Drawdown and risk-adjusted measures belong in the same table.
On the desk
Over two years of synthetic prices, buy and hold ends at +7% with a 17.8% maximum drawdown, while a moving-average rule ends at −8% with a 14.4% drawdown. The rule took less risk but earned less — on one random path, which proves nothing either way.