Analysis of Momentum + Engulfing Strategy vs Buy-and-Hold for PLTR, NVDA, TSLA (Jan-Nov 2025)

This analysis combines a Reddit user’s backtest of a Momentum + Engulfing trading strategy [3] with internal market data [0], [1], [2]. The user tested the strategy on PLTR, NVDA, and TSLA from January to November 2025, reporting a ~52% win rate and ~1.5R profit (where R = risk per trade). Internal data reveals significant buy-and-hold returns for the stocks: PLTR (+124.74%), NVDA (+37.21%), and TSLA (+4.82%). For PLTR, the buy-and-hold return far outperformed the strategy’s likely total return (assuming typical R values and transaction costs). The strategy has a positive expected value (0.521.5R -0.481R = +0.3R per trade) but is less efficient for PLTR compared to long-term holding.

1. PLTR’s exceptional buy-and-hold performance (124.74% gain) overshadows the strategy’s returns, highlighting the trade-off between active trading and long-term holding for high-growth stocks.
2. The strategy has positive expected value but requires strict risk management to mitigate transaction costs and slippage.
3. European traders face restrictions on QQQ/SPY, limiting diversification options for the strategy.
4. The strategy’s win rate (52%) is slightly above break-even, but its efficiency depends on the number of trades and average risk per trade (R value).

• Overfitting
  : Backtest results are based on a limited set of stocks and period, so they may not generalize to future markets or other instruments [3].
• Transaction Costs
  : Active trading incurs fees (0.1-0.5% per trade) and slippage, which reduce net returns [0].
• Tax Implications
  : Short-term gains from active trading are taxed at higher rates than long-term holdings [0].
• Volatility
  : PLTR’s daily volatility (4.41%) poses risks for buy-and-hold investors, though the strategy may have lower drawdowns (data not available) [0].

• Validation
  : Testing the strategy on out-of-sample data (e.g., Dec 2025-Feb 2026) or other stocks can confirm its robustness [0].
• Risk Adjustment
  : Optimizing the strategy’s risk per trade (R value) or adding stop-losses may improve efficiency [3].

• Strategy Metrics
  : ~52% win rate, ~1.5R profit (Jan-Nov2025) [3].
• Buy-and-Hold Returns
  : PLTR (+124.74%), NVDA (+37.21%), TSLA (+4.82%) [0], [1], [2].
• Volatility
  : PLTR (4.41%), NVDA (3.24%), TSLA (4.15%) [0], [1], [2].
• Information Gaps
  : Strategy’s total return, average R value, number of trades, maximum drawdown, and transaction costs included in backtest [3].