Candlestick Patterns Backtested on S&P 500

Explore backtested candlestick patterns for the S&P 500. Discover which patterns are effective for daily trading, featuring a combined strategy with a 74% win r

Published · Updated · Methodology: Technical Indicators

Part of: Moving Average Strategies

  • Methodology: Technical Indicators
  • Content type: strategy
  • Timeframes: Daily
  • Markets: S&P 500, Stocks

Indicators used

  • Bearish Separating Lines
  • Bullish Marubozu
  • Long-Legged Doji
  • Neutral Doji
  • Bullish Harami
  • Three Inside Up
  • Bullish Piercing Line
  • Dark Cloud Cover
  • Three Outside Down
  • Bearish Engulfing
  • Moving Averages
  • RSI

Source video

Decoded from: I Tested 75 Candlestick Patterns, and I Found This by Quantified Strategies — watch the original

Key timestamps:

  • 0:18 - Introduction to backtesting candlestick patterns
  • 1:20 - Backtesting methodology and S&P 500 focus
  • 1:45 - Ranking criteria (profit factor, annual returns)
  • 2:20 - Profit factor definition and acceptable threshold (1.75)
  • 2:40 - 10th best: Bearish Separating Lines (bullish signal)
  • 3:30 - 9th best: Bullish Marubozu
  • 4:15 - 8th best: Long-Legged Doji
  • 4:55 - 7th best: Neutral Doji
  • 5:35 - 6th best: Bullish Harami
  • 6:05 - 5th best: Three Inside Up
  • 6:45 - 4th best: Bullish Piercing Line
  • 7:20 - 3rd best: Dark Cloud Cover
  • 7:50 - 2nd best: Three Outside Down
  • 8:25 - 1st best: Bearish Engulfing (bullish signal)
  • 9:15 - Combined strategy with top 5 patterns

Strategy overview

Candlestick patterns compress a bar's open, close and wick behaviour into named formations that traders read as clues about who won the session — a vocabulary handed down largely on reputation rather than measurement. This entry is not a system built on one of those formations; it is the measurement itself. The source video, Quantified Strategies' "I Tested 75 Candlestick Patterns, and I Found This", pushes a large library of patterns through one fixed test — the S&P 500, on the Daily timeframe — and ranks what survives.

What makes the chapter map worth reading is the order it insists on: criteria before results. The timeline moves from the introduction to the backtesting methodology and the choice of the S&P 500, then to the ranking criteria — profit factor and annual returns — and defines profit factor along with the threshold it will treat as acceptable (1.75) before a single pattern is named. Only then does the countdown begin, at number ten. The patterns filed for this entry span both bullish and bearish families — marubozu, doji, harami, engulfing, piercing line, dark cloud cover, three inside up, three outside down — and the first one the video names, Bearish Separating Lines, is filed here as a bullish signal: precisely the name-versus-behaviour mismatch that only surfaces when folklore is measured instead of repeated. The published timeline stops after the ninth-best pattern, so the upper rungs of the ranking stay inside the video.

Two items in the indicator list are not patterns at all. Moving averages and RSI appear only as possible filters, with no settings specified, which tells you the unit under test is the raw pattern before any trend or momentum condition is layered on top. No entry, exit or risk rules were extracted for this entry, so this page is a way into the source rather than a substitute for it — and it is worth carrying the obvious questions in with you: how many occurrences each pattern produced over the test window, what exit convention was held constant across all seventy-five, and whether a ranking built on one index and one timeframe holds up anywhere else.

Topics

candlestick patterns · s&p 500 trading strategy · daily trading · technical analysis · stock trading strategy · price action · backtesting strategy · trading strategy · long short strategy · winning trading strategy · swing trading · technical indicators

Frequently asked questions

What does it mean to backtest a candlestick pattern?

It means treating the pattern as a mechanical trigger — a formation that either occurs on a given bar or does not — and measuring what happened afterwards across a long price history, holding the market, timeframe and exit convention constant for every pattern. Without that fixed frame, pattern rankings are not comparable to one another.

Which market and timeframe are these patterns tested on?

The test is anchored to the S&P 500 on the Daily timeframe. Candlestick reliability is instrument- and timeframe-dependent, so a ranking produced on daily index bars should not be assumed to carry over to intraday charts, individual stocks, forex or crypto without re-testing there.

Do moving averages or RSI play a role in this test?

They are listed only as possible filters, with no settings specified. The subject here is the pattern measured on its own, before any trend or momentum condition is added — a moving average or RSI filter is the kind of layer you would test afterwards to see whether it genuinely improves the edge or simply shrinks the sample.

Are the full trading rules for this one available?

No entry, exit or risk rules were extracted for this entry — a ranking video reports measured outcomes rather than a complete rule set. Strategy Decoder files what a source actually specifies, so this page leans on the concept and the video; if a pattern from the list interests you, backtest it yourself on historical data before committing capital.

About this strategy page

This trading strategy was decoded by Strategy Decoder's AI from a public YouTube trading video and turned into a structured, reviewable specification. In the interactive app this page shows the full entry and exit logic, risk management settings, the indicators involved with their parameters, AlgoWizard-compatible logic and a Pine Script export ready for TradingView backtesting — plus an automated backtest verdict when one has been computed for this strategy.

Strategy Decoder catalogs 2,229 decoded strategies. Each one is extracted with confidence scoring, cross-linked to the indicators it uses, and kept up to date as new videos are processed daily. Load this page with JavaScript enabled to use the interactive tools, or start from the strategy explorer to filter by methodology, market and timeframe.

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