Day Trading Price Action Strategy — Comprehensive Overview and Backtest Analysis

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.

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.

In this backtest, we use three lower lows and three lower highs. We use hourly bars. Let’s list the trading rules:

1. We use hourly bars.

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

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

4. 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) looks like the image shown below.

You can find more info about this trading strategy here:
https://www.quantifiedstrategies.com/day-trading-price-action-strategy/