Day Trading Price Action Strategy — Overview and Backtest

A day trading price action strategy refers to the pattern of price movement of an asset. Thus, a day trading price action trading strategy is using patterns of price movements to determine when to enter and exit a trade.

In this post, we take a look at price action and we give some advice on backtesting price action trading strategies.

We believe the trading rules are pretty straightforward: we want to enter a position after a series of lower lows and lower highs in a row.

We backtest the following trading rules:

- We use hourly bars.

- We enter at the close when the bar is the third lower low and third lower high in a row.

- We enter a position only at 1030 local NY time.

- We sell at the close of 1600 NY time.

We backtest the WTI crude oil futures contract that is traded on NYMEX. The equity curve (2000-2021) is shown below.

Found our trading recommendations useful? check more here:
https://www.quantifiedstrategies.com/day-trading-price.../