Does TD Sequential work on bitcoin?
Not on hourly bars. Buying bitcoin and ether perpetual futures on TD Sequential’s “buy 9” setup, as coded in a public strategy library for the freqtrade bot, lost money before any costs from 2020 to September 2026 (gross Sharpe ratio −0.75 for bitcoin, −0.20 for ether), while the same exposure at random times earned +0.39 and +0.44. After nine lower closes, prices tended to keep falling.
The claim
Tom DeMark’s TD Sequential counts exhaustion. A buy setup completes when nine consecutive bars close below the close four bars earlier; DeMark reads it as a sign that selling is spent and a reversal is near, and adds a “perfection” check on the lows of the final bars. The indicator ships with most charting platforms. The freqtrade strategy we replicated buys on a completed, perfected setup, exits on the opposite setup and uses a 5% stop.
What we tested
BTC and ETH perpetual futures, hourly bars, 2020 to September 2026, long-only exactly as in the code, with funding included. We compared the strategy with the same amount of time in the market placed at random — a placebo that shows how much of any result comes from simply holding a rising asset part of the time — and checked the two halves of the sample separately.
Result
The strategy was in the market about a third of the time. Its gross Sharpe ratio was −0.75 on bitcoin and −0.20 on ether, against +0.39 and +0.44 for random timing with the same exposure, and both halves of the sample were negative for both coins. The exhaustion reading runs backwards on hourly crypto bars: after nine closes below the close four bars earlier, the decline more often continued than reversed.
TD Sequential buy setup, long-only, hourly, before costs
| BTC | ETH | |
|---|---|---|
| Strategy, gross Sharpe ratio | −0.75 | −0.20 |
| Random timing, same exposure | +0.39 | +0.44 |
| First half of the sample | Negative | Negative |
| Second half of the sample | Negative | Negative |
What it means
On hourly bars a run of lower closes marks persistent selling, not its end, and buying into it means standing in front of short-term momentum. The verdict covers the mechanical setup; discretionary use, the full Countdown phase and daily charts are different rules that this test does not cover.
What would change the verdict
The mirror reading — treating a completed setup as a continuation signal — needs its own test fixed in advance, not a flipped version of this one. Daily bars and the 13-bar Countdown are the next candidates.
This note re-tests a claim made by the cited authors on our own crypto market data; the summary of their method is ours. Tested · published · last reviewed . Research, not investment advice.