A technical analysis technique stated as a rule for buying or selling stock according to past price movements. The filter rule is usually stated in the following way: Purchase the stock when it rises by X percent from the previous low and hold it until it declines by Y percent from the subsequent high. At this point, sell the stock short or hold cash. Filter rules are a timing strategy. They show investors when they should be long in a security and when they should sell it short. The alternative to timing is to buy and hold the security. Thus, filter rules are analyzed by comparing them to buy and hold strategy. One further assumption is necessary for the buy and hold strategy to be relevant; namely, the expected return is positive. If the expected return is negative, then the relevant alternative is to hold cash.