The baseline implementation of EA-042 Three-Bar Continuation did not demonstrate a profitable or acceptable risk profile under the tested XAUUSD conditions.

This test should be treated as a baseline research result and not as evidence of a production-ready trading strategy.

Test Environment

Setting	Value
Expert Advisor	EA-042_Three-Bar_Continuation
Symbol	XAUUSD.PRO
Timeframe	M1
Test Period	2026-01-02 → 2026-04-01
Initial Deposit	$1,000
Leverage	1:500
History Quality	100% real ticks
Bars	86,539
Ticks	40,346,891

Parameters

Parameter	Value
Lot Size	0.01
Stop Loss	300 points
Take Profit	600 points
Magic Number	20240001
Slippage	10 points
Maximum Spread	35 points
Maximum Positions	1
Break Even	Disabled
Break Even Start	150 points
Trailing Stop	Disabled
Trailing Start	200 points
Trailing Step	50 points

Performance Summary

Metric	Result
Total Net Profit	-$992.09
Gross Profit	$11,590.64
Gross Loss	-$12,582.73
Profit Factor	0.92
Expected Payoff	-$0.17
Recovery Factor	-0.91
Sharpe Ratio	-5.00
Maximum Balance Drawdown	$1,095.51 (99.28%)
Maximum Equity Drawdown	$1,095.51 (99.28%)
Total Trades	5,815
Total Deals	11,630

Trade Statistics

Metric	Result
Winning Trades	1,862 (32.02%)
Losing Trades	3,953 (67.98%)
Short Trades	2,846
Short Win Rate	31.13%
Long Trades	2,969
Long Win Rate	32.87%
Largest Winning Trade	$35.33
Largest Losing Trade	-$42.23
Average Winning Trade	$6.22
Average Losing Trade	-$3.18
Maximum Consecutive Wins	6
Maximum Consecutive Losses	26
Average Consecutive Wins	1
Average Consecutive Losses	3

Position Holding Time

Metric	Result
Minimum	00:00:01
Maximum	02:48:02
Average	00:04:18

Baseline Assessment

FAIL

The tested configuration fails the baseline profitability and risk evaluation.

Primary reasons:

Total Net Profit is negative.
Profit Factor is below 1.0.
Expected Payoff is negative.
Sharpe Ratio is negative.
Maximum drawdown reached 99.28%.
67.98% of all trades were losing trades.
The balance curve shows substantial deterioration over the test period.

The initial $1,000 account was effectively depleted during the test.

Research Interpretation

This result does not establish that the general Three-Bar Continuation concept is invalid.

It establishes that the currently tested combination of:

entry logic,
M1 timeframe,
XAUUSD.PRO,
SL = 300 points,
TP = 600 points,
no Break Even,
no Trailing Stop,
and the current execution/filter logic

does not provide an acceptable trading system under this test.

The result should therefore be preserved as the baseline backtest for EA-042.

Conclusion

EA-042_Three-Bar_Continuation — Baseline Backtest: FAIL

The current version should not proceed to live trading based on this result.

Further research or modification is required before the EA can be considered for another validation stage.