Does the doji pattern work? 79,778 tested

The doji is taught as a indecision, possible reversal. We found 79,778 of them in 758,032 sessions of S&P 500 history and measured what happened next.

What that means

A doji shows indecision rather than direction, so it makes no directional claim to test. We included it because it is one of the most searched patterns on the web. The directional result over five days is a clean zero.

How the pattern was defined

Open and close within a tenth of the session's range. The definition is mechanical, which matters: a pattern you can only recognise after the fact is not a pattern you can trade. Anything requiring judgement to spot would score differently for every reader, and could not be tested at all.

On this sample the doji did not separate from an ordinary bar. That is not proof it never works. It means that if there is an effect here, it is smaller than 79,778 instances can detect, which is a strong constraint on how much weight the pattern deserves on its own.

The half a backtest cannot answer

A backtest says what the market did. It cannot say what a reader does when the pattern appears, and that is where most of the damage happens. Read the Tape deals the same five blind charts to everyone, so we can see both at once: across 52 settled charts the textbook lean was right on 46.2% of them, and the crowd followed it on 71.2%.

How this was measured

Every pattern is scored the same way. Take 153 S&P 500 names, 2005-01-01 to 2025-01-01, which is 758,032 daily sessions. Mark every bar where the pattern completes, using only information available at that bar. Measure the close 5 trading sessions later, the same horizon the game itself uses. Compare against the base rate across all bars in the same sample, which is 54.7% higher after five sessions.

The comparison is a two-sided test of proportions and the threshold is the conventional 5%. "No measurable effect" means the pattern failed that bar, not that the effect is exactly zero. The code is one file and the definitions are written out in full on each page, so you can disagree with a threshold and see what it changes.

What this does not show

These are unconditional five-day results on large-cap US stocks over one twenty-year window. They say nothing about intraday trading, about other markets, or about a pattern used in combination with something else. A trader who uses the hammer as one input among several is not tested here. Neither is any pattern at a horizon other than five sessions, and a signal can be useless over a week and useful over a quarter.