What Is The Success Rate Of Candlestick Patterns?

Last Updated on October 19, 2022

Candlesticks are a popular charting tool because they “packs” data recordings into single easy-to-read price bars. The time frame of your choice can easily be interpreted in just one visual look at the chart. All charts on this website use candlesticks. You might agree they are useful for charting but are they useful in making quantified trading strategies? What is the success rate of candlestick patterns?

The success rate for candlestick patterns is high: Among all 75 candlestick patterns, 66% beat the S&P 500 over its holding period (de-trended).  

Let’s go on to describe how we calculated the success rate for all 75 candlestick patterns:

What is the success rate of candlestick patterns?

In our recent course about candlesticks, we quantified all 75 candlestick patterns that exist and backtested them on S&P 500 (SPY). The results were much better than we anticipated: Using detrended data (see more about detrending further down) we found out that 50 of the patterns returned better results than a buy and hold strategy over the holding period.

For your convenience, all the results are displayed in the chart below. If you want to see the name of the pattern you need to order our research. We have a special rebated offer that is valid until midnight 6th of July:

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What is detrending?

Detrending is about removing any long-term trends in a dataset. For example, if you have a trading strategy that returns 5% annually while the base security also returns 5% annually, we can argue the trading strategy returns zero return (alpha). All things being equal, you can just as well just buy the security or asset and do nothing. However, the risk performance might be different – drawdowns, for example.

Here is another example of detrending: we must adjust for the long-term trend in stocks: statistics show that the stock market over time rises about 0.04% per trading day (we covered this trend in an article about night and overnight trading). If your trading strategy returns 0.1% per trading day over its three-day holding period, you clearly have a positive strategy.

You might like to read all our other articles about candlesticks

75 candlestick patterns quantified and ranked (the table is sortable):

The results are summarized in this sortable table:

Pattern#TradesAvg P\LMax DDWin RatioProfit FactorAnnual ReturnExposureRank
154.15-2.43100N/A0.680.181
221.370100N/A0.090.032
3101.3-4.41905.850.440.523
4471.04-4.9682.985.361.642.584
5200.98-3.968070.661.115
61060.73-14.3480.192.922.594.946
7550.72-9.6874.552.681.322.737
8150.7-8.9473.332.480.340.88
9250.67-18.63881.910.531.219
1010.66-0.48100N/A0.020.0410
1190.65-2.9888.897.930.20.3811
12580.62-9.2779.313.271.212.5812
13140.62-2.6678.578.930.290.4312
14510.61-7.1768.632.511.043.3814
15460.6-10.1969.572.490.913.0515
16130.58-9.2853.851.630.230.9816
17130.58-9.2853.851.630.230.9816
181220.57-15.780.333.862.384.8118
19160.56-3.68754.430.30.6219
202760.55-16.671.742.635.1613.7920
211920.5-18.269.272.143.199.921
221150.44-15.3476.522.311.694.7622
23450.43-12.5962.221.930.641.9923
24670.43-1379.12.330.962.7723
251140.42-23.7573.681.631.556.1725
26500.42-3.88723.190.72.9225
27250.41-9.93601.710.331.1727
28690.41-18.0169.571.540.883.9527
29800.37-25.1168.751.550.944.5629
30520.37-8.51752.110.642.2929
31530.37-17.7879.251.710.632.5629
32540.37-8.9672.221.980.672.1329
331200.36-22.6270.831.591.376.4333
342850.36-25.6176.491.753.3411.3133
351120.34-14.3473.211.921.267.0835
36620.34-12.3774.191.890.72.7935
37100.34-4.11802.030.110.3535
382080.32-18.6967.791.682.211.5738
39450.3-16.7968.891.390.412.5939
40190.29-7.9663.161.760.180.8440
41320.27-5.1671.882.110.291.1941
4290.26-4.1177.781.720.080.3342
4350.25-1.15602.990.040.1843
44400.25-9.2672.51.680.331.9443
455000.24-24.79701.483.7724.3345
462340.23-24.5377.351.41.6811.3646
472340.23-24.5377.351.41.6811.3646
48570.23-8.4964.911.630.432.9346
49390.22-6.2376.921.610.281.8649
50130.16-5.8453.851.390.070.6650
51400.15-10.7877.51.340.192.0751
521590.15-25.8663.521.240.7210.6651
53150.15-13.0873.331.140.060.651
5410.130100N/A00.0154
55420.09-22.9461.91.050.062.455
56420.08-6.4369.051.260.121.7956
57580.07-6.8958.621.140.122.9857
582500.05-34.6166.41.020.1412.858
5990.03-5.2155.561.040.010.5859
60740.03-14.5372.971.030.044.0159
61110.03-3.7763.641.120.010.659
6220.02-3.34501.0100.1462
63340.02-14.7167.650.97-0.031.6762
64120.01-12.33750.98-0.010.7964
6535-0.01-5.9151.430.97-0.021.8265
6697-0.02-27.8763.920.93-0.166.9666
6788-0.03-11.6460.230.93-0.114.5467
6833-0.17-13.3569.70.75-0.211.5768
6931-0.2-24.2467.740.76-0.282.1669
7070-0.32-34.0561.430.68-0.95.2770
712-0.39-1.8900-0.030.1571
7219-0.47-16.8347.370.59-0.331.5272
7316-0.78-17.01500.35-0.441.0473
7413-0.94-15.6953.850.35-0.430.9974
757-1.57-19.7557.140.34-0.420.6475

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