This study investigates the empirical evidence for the profitability of the chart patterns used widely by practitioners to identify market trend movements. The results show that for a certain group of traders, trading strategies based on the patterns identified in the stock market can generate abnormal returns after correcting for the three Fama-French factors. Further, it shows that the standard econometric and mathematical finance models used to simulate stock returns cannot capture the full complexity of the true market data generating process. The analysis also demonstrates that the stochastic volatility model proposed by Heston does provide improved performance and does explain a substantial part of the abnormal returns. This is accomplished by simulating more complex volatility innovation structures and describing the market dynamics more accurately. III