The best indicator for GBP/USD
We backtested 20 indicators across daily, weekly and hourly charts on real GBP/USD history. Here's what actually worked — risk-adjusted, out-of-sample, with costs.
ADX / DMI
On the daily chart, this is the strongest risk-adjusted edge we found for GBP/USD over ~23.2 years — beating buy-and-hold by 1.3% CAGR.
The winner on each chart
Every indicator, ranked
Ranked by Sharpe (risk-adjusted return). Hypothetical, fees included.
| # | Indicator | TF | CAGR | Sharpe | Max DD | Win | Trades | vs B&H |
|---|---|---|---|---|---|---|---|---|
| 1 | ADX / DMI ✓ | Daily | 0.3% | 0.08 | -20.0% | 31.2% | 138 | 1.3% |
| 2 | CCI ✓ | Daily | 0.3% | 0.08 | -18.9% | 68.6% | 121 | 1.4% |
| 3 | WaveTrend (8/6/4) ✓ | Daily | 0.2% | 0.06 | -21.2% | 63.4% | 93 | 1.3% |
| 4 | Donchian Midline ✓ | Weekly | 0.1% | 0.04 | -20.8% | 44.8% | 58 | 1.2% |
| 5 | RSI Mean-Reversion ✓ | Weekly | -0.2% | 0.01 | -27.9% | 60.0% | 10 | 1.0% |
| 6 | EMA 20/50 Cross | Daily | -0.2% | -0.01 | -21.9% | 43.4% | 53 | 0.8% |
| 7 | Bollinger Mean-Reversion | Daily | -0.3% | -0.04 | -20.1% | 61.7% | 107 | 0.7% |
| 8 | MACD | Weekly | -0.6% | -0.05 | -30.4% | 39.6% | 48 | 0.6% |
| 9 | CCI | Weekly | -0.7% | -0.07 | -36.5% | 63.6% | 22 | 0.4% |
| 10 | RSI Trend (>50) | Weekly | -0.7% | -0.08 | -26.0% | 33.9% | 62 | 0.5% |
| 11 | WaveTrend (8/6/4) | Weekly | -1.0% | -0.09 | -40.2% | 70.6% | 17 | 0.2% |
| 12 | Donchian Breakout | Weekly | -0.6% | -0.1 | -18.6% | 41.2% | 17 | 0.6% |
| 13 | SMA 50/200 Cross | Daily | -0.8% | -0.12 | -28.1% | 33.3% | 18 | 0.3% |
| 14 | EMA 50/200 Cross | Daily | -0.8% | -0.13 | -30.6% | 38.9% | 18 | 0.3% |
✓ = held up out-of-sample. Hypothetical, costs included. See methodology.
For GBP/USD, ADX / DMI on the daily timeframe gave the best balance of return and risk in our test. It beat buy-and-hold — but remember: this is a hypothetical backtest of a standard rule, not a recommendation. Markets change. See the methodology and disclaimer.
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