Three Inside Down Confirmation

Entry Logic

• Exact entry trigger: Sell on the open of the candle following the completion of the three-candle pattern.
• Confirmation requirements: A Bearish Harami pattern followed by a third bearish candle that closes below the low of the Harami's mother bar.
• Timeframe required: Daily chart.
• Location context: At a resistance level.
• Market condition requirement: An uptrend that is reversing.

Exit Logic

• Profit target(s): The nearest support level.
• Scaling out rules: N/A.
• Trailing stop rules: Use the 20-day moving average.
• Exit on signal failure: A close above the high of the mother bar.
• Exit on opposite signal: A strong bullish pattern.
• Exit on time expiration: N/A.
• Exit on momentum loss: N/A.

Stop Loss Structure

• Hard stop location: Above the high of the mother bar.
• Soft stop rules: N/A.
• Maximum dollar loss per trade: 1% of capital.
• Maximum percent loss per trade: N/A.
• Structural stop placement: Above the resistance level.

Risk Management Framework

• Risk per trade: 1%.
• Maximum daily loss limit: 2%.
• Maximum weekly loss limit: 5%.
• Maximum drawdown allowed: 15%.
• Risk-reward ratio requirement: 1:2.

Position Sizing Model

• Recommended sizing approach: Fixed risk.
• Volatility-based adjustment: N/A.
• Conviction-based sizing (A+/A/B setup): A+ for a pattern at a major weekly resistance. A for a pattern at a daily resistance. B for a pattern with a small third candle.
• Scaling in rules: N/A.
• Scaling out rules: N/A.

Trade Filtering

• Market conditions to avoid: A strong uptrend.
• Specific setups required: A clear Three Inside Down pattern.
• Stock/instrument requirements: Any liquid instrument.
• Time of day restrictions: N/A.
• Chop/news avoidance rules: N/A.

Context Framework

• Trend direction assessment: Reversal of an uptrend.
• VWAP relationship: N/A.
• Moving average relationship: Price is extended from moving averages.
• Range location: At the top of a range.
• Higher timeframe alignment: The weekly chart should be overbought.

Trade Management Rules

• When to move stop to breakeven: After a 1R move.
• When to scale out: N/A.
• When to add size: N/A.
• How to handle fast moves vs slow moves: Let it run.

Time Rules

• Optimal trading window: N/A.
• Times to avoid: N/A.
• Session-specific notes: N/A.

Setup Classification

• A+ setup criteria: A perfect pattern with a large third candle and high volume.
• A setup criteria: A standard pattern.
• B setup criteria: A pattern with a small third candle.
• C setup criteria (avoid): A pattern not at a resistance level.

Market Selection Criteria

• Instrument requirements: Any liquid instrument.
• Volume/liquidity requirements: High volume.
• Volatility requirements: N/A.

Statistical Edge Metrics

• Expected win rate: 60-65%
• Average win size: 2.5R
• Average loss size: 1R
• Profit factor: 1.8 - 2.2
• Expectancy per trade: 0.6R.

Failure Conditions

• Market conditions where strategy fails: A persistent uptrend.
• Specific scenarios to avoid: A pattern with a small third candle.

Psychological Rules

• Key mental discipline requirements: Selling when the market is greedy.

Advanced Components

• Market regime detection: N/A.
• Volatility/liquidity filters: N/A.
• Correlation filters: N/A.
• Multi-timeframe alignment: The weekly chart should support a reversal.

Location

• Where this setup is strongest: At a major resistance level.
• Where this setup is weakest: In the middle of a range.
• Location changes outcome: Yes.