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Finaxion Research · ICT / Smart Money: the fair value gap · single stocks · Recomputed 2026-09-10

Does ICT / Smart Money: the fair value gap work on IRM?

ICT / Smart Money: the fair value gap does not beat buy-and-hold on IRM: -17.2 points a year over 31 years.

Total return
-25.7%
Buy and hold
×100
CAGR
-1.0%
Sharpe
-0.93
Max drawdown
-25.7%
Trades
258
Out of sample
overfit
Years
31
1×10×100×112×1997200020032006200920122015201820212024
StrategyIRM

Findings

  1. ICT / Smart Money: the fair value gap does not beat buy-and-hold on IRM: -17.2 points a year over 31 years.
  2. Against the S&P 500 over the same window: -11.3 points a year.
  3. Total return -25.7% versus ×100 for buy-and-hold, with 258 trades.
  4. The result does not hold out of sample: it is overfit.
  5. Maximum drawdown -25.7%.
  6. It beats in neither half of the history (split at 2011).
  7. It ranks #132 of 235 markets for this strategy by annual excess over the S&P 500.

Findings derived from the full panel. Each carries its number and its denominator; the computations are reproducible with artifact baf59d3a43e0.

Exactly what was tested

Mechanical approximation: three-candle bullish gaps are detected within a 38-bar window; a return of price into the gap → entry; exit after 20 bars.

How to read it

The verdict compares the strategy with buying and holding IRM over the same window, with round-trip costs per asset class. “Out of sample” is walk-forward: the rule is fit on one stretch and judged on the next. A result that beats in the full sample but not out of it is overfit. Full methodology in the protocol. How we test.

Open this backtest with its trades   Trades (CSV)

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How to cite

Finaxion Research (2026). Does ICT / Smart Money: the fair value gap work on IRM?. Daily backtest 1962-01-01–2026-08-31, artifact baf59d3a43e0. https://finaxion.app/en/research/ict-fair-value-gap/irm

Not a recommendation. Past performance does not guarantee future results.