Best Time Frame for Candlestick Patterns

Quantified Strategies · Beginner ·🌐 Frontend Engineering ·2w ago

Skills: ML Pipelines60%

Key Takeaways

Analyzes the best time frame for candlestick patterns in trading

Full Transcript

Are you struggling to find the right time frame for your candlestick trades? To give you an example, we backtested three candlestick patterns and tested them on S&P 500 using different time frames. When using a daily time frame, we got the equity curve on the screen from 1993 until today, an average gain of 0.43% per trade. When we applied the three candlesticks on a weekly time frame, the results are poor. The 105 trades returned 0.7% per trade. Now, what about intraday charts? Like 15-minute or hourly candles. These did show high raw returns, but with a catch. Intraday trading racks up commissions, slippage, and noise. The sweet spot, candlestick patterns on daily charts held for 1 to 10 trading days. That's where the data shows the strongest signal and best performance. >> [music]

Original Description

Do candlestick patterns work better on daily or weekly charts? If you're interested in rule-based trading, backtesting, and systematic strategies, we'd love to have you in our Skool community: https://www.skool.com/rule-based-trading We backtested three popular candlestick patterns on SPY to find out: • Bearish Engulfing • Three Outside Down • Bullish Harami The daily time frame produced more trades, a higher CAGR, and a stronger profit factor, while the weekly version generated fewer opportunities and weaker long-term performance. The biggest takeaway is simple: the time frame can matter just as much as the pattern itself. That's why every trading idea should be tested rather than assumed. #Trading #Backtesting #CandlestickPatterns #StockMarket

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