Candlestick patterns against the null: the bootstrap test
The cleanest negative result in the indicator literature, as a test you run yourself. Detect a real pattern on synthetic bars, measure the forward return, then compare it against the same number of randomly chosen entry dates. The control that makes it honest: inject a real edge and the same test lights up.
Self-contained simulation on randomly generated synthetic data — not market data, not a live signal, and not a record of trading. It runs entirely in your browser; nothing is sent anywhere. Educational information only — not investment advice. Hypothetical backtested results; past performance does not guarantee future results. Trading involves risk of loss. Full-page version, with the findings and citations
What the research actually found
The support rating below is the same one this concept carries in our research corpus, and the quoted findings are the corpus text — not a summary written to flatter the simulation. Every citation was verified against its source.
Candlestick patterns
also called: doji, engulfing, hammer, 'price action' candle signals
Where it comes from. Attributed to 18th-century Japanese rice trading and popularized in the West in the 1990s. The first robust academic test came only in 2006.
What the research supports. Nothing robust. This is the cleanest negative result in the indicator literature.
What it does not support. Tested across the full menu of bullish and bearish candlestick signals on DJIA stocks (1992–2002) with bootstrap methods, candlestick strategies created no value for investors — returns were statistically indistinguishable from chance (Marshall, Young & Rose 2006).
Sources: Marshall, Young & Rose (2006) · full concept-by-concept evidence
Also embedded on
1 sources — all verified
- Marshall, Ben R., Young, Martin R., & Rose, Lawrence C. (2006). “Candlestick technical trading strategies: Can they create value for investors?” Journal of Banking & Finance, 30(8), 2303–2323.
This simulation demonstrates a mechanism on synthetic data; it does not reproduce any paper's dataset or reported magnitudes. Educational information only — not investment advice. Educational information only — not investment advice. Hypothetical backtested results; past performance does not guarantee future results. Trading involves risk of loss. See the methodology and the full disclaimer.
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