Best indicators for beginners, tested: ranked by our own results
Last updated
Short answer: none of the common indicators passed our luck check. We ranked 15 popular indicator rules by how they did against a benchmark in our own backtests. 5 finished ahead on the raw number, all with p-values too high to rule out luck, and the rest finished behind. This is a ranking of past results from our tests, not a pick and not a promise.
How we ranked them
Each row is one indicator rule, written down as exact code and run on past prices of stocks, ETFs or crypto, with trading costs charged on every trade. The result is growth per year against a benchmark: an equal-weight mix of the same assets, rebalanced daily, with no costs. A plus means the rule finished ahead, a minus behind. The table is sorted from the best result to the worst. Each row links to the page that has its full detail, including every other version of that rule we ran. These are in-sample backtests on past data, not a promise.
The ranking
| Rank | Indicator rule | Market tested | Trades | Against the benchmark, per year | p-value | Source |
|---|---|---|---|---|---|---|
| 1 | Volume-weighted moving average (VWMA) cross | 18 crypto pairs, daily | 2,248 | +23.2 points | 0.244 | Test page |
| 2 | MACD line above its signal line | 18 crypto pairs, daily | 1,382 | +17.7 points | 0.275 | Test page |
| 3 | Bollinger Bands: buy a close above the upper band | 18 crypto pairs, daily | 695 | +9.3 points | 0.41 | Write-up |
| 4 | Golden cross (50/200 EMA), hourly bars | 8 crypto pairs, hourly | 1,393 | +8.5 points | 0.39 | Write-up |
| 5 | Supertrend | 18 crypto pairs, daily | 434 | +6.0 points | 0.419 | Test page |
| 6 | Golden cross (50/200-day), long or cash | 1 ETF (QQQ), daily | 13 | -1.4 points | 1.000 | Test page |
| 7 | Bollinger Bands: buy a close below the lower band | 25 ETFs, daily | 515 | -5.6 points | 1.000 | Test page |
| 8 | Golden cross (50/200-day), long or cash | 40 US stocks, daily | 261 | -6.5 points | 1.000 | Test page |
| 9 | RSI above 70 as momentum, exit under 50 | 18 crypto pairs, daily | 330 | -7.2 points | 1.000 | Test page |
| 10 | MACD line above its signal line | 40 US stocks, daily | 3,290 | -8.3 points | 1.000 | Test page |
| 11 | Supertrend (10,3) flip | 40 US stocks, daily | 1,320 | -9.4 points | 1.000 | Test page |
| 12 | Stochastic oversold cross | 8 US stocks, daily | 252 | -17.5 points | 1.000 | Test page |
| 13 | RSI 50-midline trend filter | 18 crypto pairs, daily | 1,086 | -18.5 points | 1.000 | Test page |
| 14 | Parabolic SAR flip | 18 crypto pairs, daily | 3,027 | -51.5 points | 1.000 | Test page |
| 15 | ADX above 25 with a +DI/-DI cross | 18 crypto pairs, daily | 452 | -70.6 points | 1.000 | Test page |
How to read the table
- The p-value is the luck test. A p-value of 0.275 means a result this good would turn up by chance alone about 27 times in 100. The top rows are above the usual 0.05 line. A value of 1.000 means the rule finished behind.
- The markets differ. Crypto had a strong benchmark and wide swings, so crypto rows can sit high or low. Compare rows from the same market first.
- Few trades means little. The QQQ golden cross traded 13 times in twenty years. That tells you very little either way.
- Many rules were tried. We tested 1,342 strategies and 265 finished ahead on the raw number. Once we corrected for luck across 1,774 tests, 0 were left. A top spot here does not survive that correction.
What each indicator measures
For a beginner, the useful question is what the line on the chart is telling you. None of these predicts the next move.
- Moving average crossovers, the golden cross and Supertrend: whether the price has been rising or falling for a while. They are always a little late.
- MACD: how fast a trend is speeding up or slowing down. See MACD tested: 19 versions.
- RSI: how hard the price has been pushed one way lately. See RSI tested: 43 versions. The classic buy-below-30, sell-above-70 rule finished 10.5 points a year behind on 40 US stocks and 42.6 behind on 18 coins.
- Bollinger Bands: how jumpy the price has been. See Bollinger Bands explained, with test results.
- The stochastic oscillator: where the price closed within its recent range.
- ADX and Parabolic SAR: how strong a trend is, and a trailing stop that flips with it.
What to do with this as a beginner
- Use an indicator to describe a chart, not to call the next move.
- Learn one or two well instead of stacking ten.
- Before you trust any rule, test it. Read how to backtest an indicator properly and run the result through the free luck checker.
- Practise with pretend money first in the paper trading simulator.
Tickfloor's own score adds up ten common checks into one number out of 10 and shows where they disagree. It describes what a chart shows today and is not a tested trade signal. You get 3 free scores a day with a free account. No card. Try a free score.
The full picture is in do trading indicators actually work? and every test is on the evidence page, failures included.
Questions
What is the best indicator for beginners?
No indicator has passed our test. We backtested 1,342 strategies and 0 passed once luck was allowed for. The ranking on this page shows how common rules did against a benchmark, not which one to use.
Which indicators did best in your tests?
The top of the table is crypto rules that finished ahead of the benchmark on the raw number, with p-values from 0.244 to 0.419. Results that good turn up by chance often, so we do not count them as proof.
Why do you rank by results against a benchmark?
Beating a plain equal-weight mix of the same assets is the bar a rule has to clear to be worth the trouble. The benchmark pays no costs, which makes it harder to beat, and the rules paid theirs.
Does a top rank mean I should use that indicator?
No. The ranking is of past results, from one stretch of history, and it changes with the market and the settings. It is general information, not a recommendation.
General information, not personal advice. Tickfloor does not hold a financial services licence.