Tested strategies Verdict: No edge

Does price action trading without indicators actually work?

By Otto Research 2 min read Tested across 17 years, with real costs

Price action trading uses no indicators, reading instead the bars themselves, the swings, the levels and the candle shapes, and is often presented as the purest form of technical trading.

The claim is that indicators lag and price does not, so reading price directly is superior.

We tested every mechanical form of price action we could define, patterns, swings, levels and their combinations, across 17 years of data with real trading costs, and found no edge in any of them. The discretionary version cannot be tested, which is part of its appeal and the whole of its problem.

The reason is that a method whose rules cannot be written down cannot be shown to work, and the parts of it that can be written down have been tested on this site and do not.

If you trade it anyway, write down your rules exactly, trade them for a year without deviation, and count the result. That is the only test discretionary price action can be given, and few who try it publish the answer.

The ones that survived

See what Otto trades instead.

Most strategies do not survive an honest test. Otto is built on the few that did, and every trade is recorded live on Karnek.