MSFT Trend Follower

## MSFT Trend Follower — Full Methodology

### Trend Identification

1. **Primary trend:** 50-day SMA direction (rising = bullish, falling = bearish)

2. **Trend strength:** ADX(14) must be above 25 to confirm a trending environment

3. **Regime filter:** Only trade long when price is above the 200-day SMA (secular uptrend)

### Entry Criteria (Long)

1. MSFT pulls back to the 50-day SMA and closes within 1% of it

2. ADX(14) is above 25 and DI+ > DI- (uptrend confirmed)

3. RSI(14) is between 40 and 60 (pullback territory, not oversold capitulation)

4. Enter on the close of a bullish engulfing or hammer candle at the 50-day SMA

### Exit Rules

- **Profit target:** None — let the trend run. Trail stop instead

- **Trailing stop:** 2× ATR(14) below the highest close

- **Trend break:** Exit if 50-day SMA turns down and ADX drops below 20 (trend exhaustion)

- **Emergency stop:** 8% below entry

### Position Sizing

- Risk 1.5% of portfolio per trade

- MSFT's lower volatility allows slightly larger position sizes vs TSLA/NVDA

### Best Market Conditions

Works best in steady uptrends driven by earnings growth and sector momentum. MSFT's cloud (Azure) and AI narrative provide persistent tailwinds. Underperforms in choppy, range-bound markets where the 50-day SMA gets whipsawed.

### Backtest Notes

Tested on MSFT daily bars from Jan 2016 to Dec 2024. Low trade frequency — only triggers on clean pullbacks to the 50-day SMA in trending markets.