Do Trading Indicators Actually Work? We Tested Every Major Signal

How this was measured

Identical engine to our candlestick pattern study, with the signal layer swapped. The method is the point — a win rate with nothing to compare it to means nothing.

• Data. Dukascopy bid-side OHLC for 93 instruments — major and cross FX pairs, gold, silver, stock indices and crypto — from 2010 to August 2026.
• Signals. Fourteen classic setups: RSI(14) leaving oversold and overbought, MACD(12,26,9) crosses both ways, the EMA 50/200 golden and death cross, EMA 9/21 crosses, closes beyond a 2-standard-deviation Bollinger band, Stochastic(14,3) crosses from the extremes, and price crossing the EMA200.
• The trade. Enter at the open of the next bar. Stop at 1.5 × ATR(14) — indicators have no natural extreme to hide a stop behind, and an ATR stop keeps risk comparable across signal types. Targets at 1:1 and 1:2, walking forward up to 40 bars.
• Ties go against you. A bar holding both stop and target is scored a loss every time.
• Real costs. Per-instrument median spreads from our own bid/ask measurement. Longs buy the ask, shorts cover at the ask.
• The control. For every signal, a trade with the same direction and the same stop distance as a fraction of price, at a random bar — five draws each. The gap between the two columns is all the signal is actually worth.

The drift problem, and why the control column is the only honest one

Seven of the fourteen daily signals show a win rate above 50% at a 1:1 target, which looks like a vindication of technical analysis until you read the column beside it.

Across this sample a matched random long won 51.8% of 1:1 trades. A matched random short won 46.6%. Nothing clever is happening there: indices, gold and crypto rose over 2010–2026, so buying at any random moment and holding to a symmetric target worked slightly more often than selling did. Every long signal in the table inherits that advantage before its indicator does a single thing.

Subtract it and most of these signals contribute between nothing and two points.

Daily charts: 1:1 target

Breakeven is a 50% win rate.

Daily charts: 1:2 target

Breakeven is 33.3%.

Four-hour charts

The 4-hour sample is several times larger, so significance rises sharply while the edges themselves shrink. MACD bullish cross beats its control by +0.7 points across 50,550 trades — a result that is statistically unmistakable and worth almost nothing at the desk.

What this means if you trade indicators

• Fame and performance are unrelated. The golden cross is the most recognisable signal in retail trading and finished last on daily 1:1 by edge over its control, at -0.6 points — while still being the only four-hour combination to clear breakeven. Recognition tells you nothing either way.
• An indicator is a filter, not a system. A one-to-two point edge on entry timing cannot carry a strategy. It can slightly improve one that already works.
• Check your benchmark before you celebrate a win rate. If a signal wins 52% and a random entry in the same direction wins 51%, the indicator earned one point, not fifty-two.
• Costs eat the edge on faster timeframes. The same signal is worth less the more often you trade it.

Limitations

• Default parameters only. RSI 14, MACD 12/26/9, Bollinger 20/2, Stochastic 14/3. Tuned settings are not tested here, and tuning them on this same data would be curve-fitting.
• One stop rule (1.5 × ATR) and two fixed targets. Trailing stops, time exits and scaling are untested.
• Signals are taken in isolation, with no trend filter or confluence — which is precisely how the isolated value of each is measured, but not how most people trade them.
• Bid data with modelled ask. Spread is a measured median, not a replayed tick-level ask feed.
• Spread only — no commission or swap. Both would push results further down.
• Trades unresolved after 40 bars are excluded; that is under 6% of any row.