Momentum Ignition Trade

Entry Logic

• Entry trigger: A large green or red candle appears on high volume after a period of consolidation.
• Confirmation: The candle closes near its high (for a long) or low (for a short).
• Timeframe: 5-minute chart.
• Location context: The trade occurs near a key support or resistance level.
• Market condition: The market is showing signs of a potential trend day.

Exit Logic

• Profit targets: 2R and 4R.
• Scaling out: Sell 50% at 2R.
• Trailing stop: Use a fast-moving average, like the 9-period EMA.
• Signal failure exit: Exit if the next candle completely reverses the entry candle.
• Opposite signal exit: Not applicable.
• Time expiration: Exit if the trade is not profitable within 30 minutes.
• Momentum loss: Exit if volume dries up and price starts to stall.

Stop Loss Structure

• Hard stop: Below the low of the ignition candle (for a long) or above the high (for a short).
• Soft stop: Not applicable.
• Max dollar loss: 0.75% of account equity.
• Max percent loss: 1.5% of the trade's value.
• Structural stop: Below the consolidation range.

Risk Management Framework

• Risk per trade: 0.5% of account equity.
• Daily limit: 3 losing trades.
• Weekly limit: 12 losing trades.
• Max drawdown: 4% of account equity.
• R:R requirement: 2:1.

Position Sizing Model

• Sizing approach: Risk-based position sizing.
• Volatility adjustment: Not applicable.
• Conviction sizing: Not applicable.
• Scaling in/out: Scale out at profit targets.

Trade Filtering

• Market conditions: Avoid low-volume, choppy days.
• Setups: Only trade clear ignition candles.
• Instruments: High-beta stocks.
• Time restrictions: Trade in the first hour of the session.
• Chop/news avoidance: Avoid trading before major news.

Context Framework

• Trend direction: The 15-minute chart should be aligned with the trade direction.
• VWAP relationship: Price should be on the correct side of VWAP for the trade direction.
• MA relationship: The 9-period EMA should be crossing the 20-period EMA.
• Range location: The trade should occur at the edge of a range.
• Higher TF alignment: The 1-hour chart should show potential for a trend.

Trade Management Rules

• Breakeven: Move stop to breakeven after 1R.
• Scale out: At profit targets.
• Add size: Do not add size.
• Fast vs slow moves: Let fast moves run.

Time Rules

• Optimal window: 9:30 AM to 10:30 AM EST.
• Times to avoid: After 10:30 AM EST.
• Session notes: This is a morning-only strategy.

Setup Classification

• A+ criteria: Perfect ignition candle with massive volume.
• A criteria: Good ignition candle with high volume.
• B criteria: Average ignition candle with average volume.
• C criteria: Avoid.

Market Selection Criteria

• Instruments: Stocks with a history of making large moves.
• Volume: High relative volume.
• Volatility: High ATR.

Statistical Edge Metrics

• Win rate: 50%
• Avg win: 3R
• Avg loss: 1R
• Profit factor: 1.5
• Expectancy: 1R per trade

Failure Conditions

• When strategy fails: Fails when the ignition candle is a fake-out.

Psychological Rules

• Mental discipline: Be prepared for fast-moving markets.

Advanced Components

• Regime detection: Not applicable.
• Filters: Volume and volatility filters.
• Correlation: Not applicable.
• MTF alignment: Check the 15-minute and 1-hour charts.

Location

• Where strongest: At the open of the market.
• Where weakest: In the middle of the trading day.