Guide · Candles & chart patterns
Does Hikkake work?
Across 375 stocks, Hikkake cut the worst fall on 93%, beat buying and holding on risk-adjusted return on 18% and on raw return on 15%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
When a stock breaks down out of an inside day and then reverses back above the inside day's high within 3 days, buy the reversal that traps the sellers.
- Setup: an inside day (a lower high and a higher low than the day before), then a day with a lower high and a lower low than the inside day (bullish) or a higher high and a higher low (bearish).
- In at the close if, within 3 sessions after a bullish setup, a close is above the inside day's high. The stop is the lowest low of the pattern.
- Out at the close if a close falls below that stop, or if a bearish setup is confirmed by a close below the inside day's low within 3 sessions.
Candles & chart patterns plays bet that a short pattern of bars can show a move running out of steam. The family guide
How to use it
- Expect to be wrong more often than right: only 35% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It sits in cash much of the time (holding on about 33% of days), so judge it on risk-adjusted return rather than on matching a rising market.
- It worked best on Real estate (37% beat holding on risk-adjusted return) and worst on Big tech (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Hikkake did best against holding in the 2008 crash (+27% median gap) and worst in the 2020–21 rally (−33%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Hikkake | +27% | −12% | +23% | −33% | +12% | −10% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Real estate | 37% | -0.21 |
| Metals & mining | 29% | -0.19 |
| Healthcare | 22% | -0.22 |
| Industrials & materials | 20% | -0.30 |
| Energy & power | 19% | -0.20 |
| Micro caps | 17% | -0.50 |
| Financials | 15% | -0.23 |
| Software & devices | 15% | -0.25 |
| Indexes & ETFs | 14% | -0.29 |
| Industrials & rentals | 11% | -0.21 |
| Media & telecom | 10% | -0.35 |
| Consumer & retail | 9% | -0.36 |
| Semiconductors | 9% | -0.36 |
| Sectors | 0% | -0.33 |
| Big tech | 0% | -0.17 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Hikkake holds 101 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.