MSFT strategy validation
Validated on 5-minute candles
Validated Oct 27, 2026 — may not reflect a later revision
- Max drawdown
- −27.4%
- largest fall from a peak, net of costs
- Average per trade
- −8.7 bp
- net of costs
- Profit factor
- 0.63 → 0.50
- in-sample → out-of-sample
- Win rate
- 38% → 36%
- in-sample → out-of-sample
- Trades
- 304
- 224 in-sample · 80 out-of-sample
Opening range breakout with fair value gap operates long. The strategy looks for entries when the price retraces to a fair value gap just after a strong move, confirmed by a bullish engulfing pattern. It generates signals regularly during the trading window. During the training period, the strategy produced consistent losses with a low profit factor. The behavior remained similar out‑of‑sample, where losses continued, albeit with a smaller drawdown. The consistency between both periods suggests that the approach does not generate a positive edge in the tested conditions. The verdict rejects this strategy due to its inability to produce gains in both windows. Verdict: rejected, not profitable in training or out‑of‑sample. Exits: take profit 0.6%, stop‑loss 0.3%; automatic close at session end if still open; maximum one trade per day. Net results include a cost of 0.10% per trade. Past results do not guarantee future results.
Results by period
| Metric | In-sampleJan 2024 – Jun 2025 | Out-of-sampleJul 2025 – Dec 2025 |
|---|---|---|
| Trades | 224 | 80 |
| Win rate | 38% | 36% |
| Profit factor | 0.63 | 0.50 |
| Avg. win | 0.37% | 0.29% |
| Avg. loss | -0.35% | -0.33% |
| Best trade | 0.50% | 0.50% |
| Worst trade | -0.40% | -0.40% |
| Longs | 224 (38%) | 80 (36%) |
| Shorts | 0 | 0 |
| Total return | -17.90% | -8.51% |
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Strategy tested
ORB Strategy (Opening Range Breakout) or first‑candlestick rule: Watch the 5‑minute chart at 9:30 AM New York time and wait for the first candle to form (between 9:30 and 9:35). Identify if the price approaches one of the levels (high or low) of this candle and leaves a void (fair value gap) between the last two candles, indicating a strong move that shows who controls the market (buyers or sellers). Once this fair value gap forms, wait for the price to return to that level and for an engulfing candle to form as confirmation. When the engulfing candle completes, enter in the direction of the initial strong move. The goal is to seek a risk‑reward of 1 to 2 (potential profit is double the risk). (Note: the automatic transcription said “fail value gap”; it was interpreted as “fair value gap.”)
What we assumed
- 5m timeframe (default): the video does not indicate the timeframe for entry.
- APPROXIMATE: the video does not state where the stop goes; a 0.3% stop adjusted to the timeframe was used. Review this rule before confirming: it completely changes the strategy’s risk.
- The engine already takes a maximum of one trade per day (the first signal), so that rule from the video is fulfilled automatically.
- Return to the gap is accepted within any of the next 12 candles after its formation (default window).
- Risk‑reward target 1:2 calculated from entry and stop.
- Trading window 09:40‑15:30 ET, Monday‑Friday: the system calculates it so that levels and price zones do not use candles from the previous session (only size references, like an average range, can read it).
- OMITTED: the video says “And even if you don’t believe it, only this candle will give you everything you need to find 3 winners.”, but that rule was not included in the interpretation.
- OMITTED: the video says “And once this happens we take the entry and look for a risk‑reward of 1 to 2.”, but that rule was not included in the interpretation.
More analyzed strategies
See allPast performance is not indicative of future results. Any past result shown here reflects historical data and does not guarantee similar outcomes going forward.
This content is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Consult a qualified financial advisor before making investment decisions.
Backtested and simulated results are hypothetical and do not represent actual trading. Simulated performance has inherent limitations and may differ significantly from live results due to market conditions, slippage, and other factors.