The best indicator for Dow Jones (DJI)
We backtested 20 indicators across daily, weekly and hourly charts on real Dow Jones (DJI) history. Here's what actually worked — risk-adjusted, out-of-sample, with costs.
Donchian Midline
On the weekly chart, this is the strongest risk-adjusted edge we found for Dow Jones (DJI) over ~34.6 years — trailing buy-and-hold by 2.9% 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 | Donchian Midline ✓ | Weekly | 5.4% | 0.55 | -34.6% | 41.9% | 93 | -2.9% |
| 2 | Rate of Change ✓ | Weekly | 4.3% | 0.48 | -37.1% | 50.0% | 112 | -4.1% |
| 3 | MACD ✓ | Weekly | 3.9% | 0.47 | -32.7% | 48.6% | 70 | -4.4% |
| 4 | RSI Trend (>50) ✓ | Weekly | 4.4% | 0.47 | -34.5% | 39.2% | 97 | -3.9% |
| 5 | EMA 20/50 Cross ✓ | Weekly | 6.6% | 0.57 | -30.4% | 58.3% | 12 | -1.8% |
| 6 | EMA 50/200 Cross ✓ | Daily | 5.0% | 0.45 | -42.8% | 41.7% | 24 | -3.4% |
| 7 | SMA 50/200 Cross ✓ | Daily | 5.0% | 0.45 | -39.8% | 55.6% | 27 | -3.4% |
| 8 | EMA 20/50 Cross ✓ | Daily | 4.0% | 0.42 | -35.8% | 44.4% | 90 | -4.4% |
| 9 | EMA-10 Trend ✓ | Weekly | 3.7% | 0.42 | -40.2% | 45.1% | 162 | -4.6% |
| 10 | WaveTrend (8/6/4) ✓ | Weekly | 3.3% | 0.41 | -48.3% | 87.0% | 23 | -5.0% |
| 11 | SMA 50/200 Cross ✓ | 1-Hour | 7.9% | 0.87 | -8.4% | 50.0% | 12 | -7.1% |
| 12 | EMA 50/200 Cross ✓ | 1-Hour | 10.7% | 1.14 | -7.6% | 55.6% | 9 | -4.3% |
| 13 | Donchian Breakout ✓ | Weekly | 3.3% | 0.39 | -31.8% | 65.5% | 29 | -5.1% |
| 14 | EMA 20/50 Cross ✓ | 1-Hour | 5.3% | 0.65 | -7.9% | 41.3% | 46 | -9.6% |
✓ = held up out-of-sample. Hypothetical, costs included. See methodology.
For Dow Jones (DJI), Donchian Midline on the weekly timeframe gave the best balance of return and risk in our test. It still trailed buy-and-hold on raw return — 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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