On-Balance Volume Momentum Confirmation

Entry Logic

• Entry trigger: The On-Balance Volume (OBV) is making new highs along with the price.
• Confirmation: The price is breaking out of a consolidation pattern.
• Timeframe: 30-minute chart.
• Location context: The entry occurs after a period of consolidation.
• Market condition: The market is in an uptrend.

Exit Logic

• Profit targets: 2R and 4R.
• Scaling out: Sell 50% at 2R.
• Trailing stop: Use the 20-period EMA as a trailing stop.
• Signal failure exit: Exit if the OBV starts to diverge from the price.
• Opposite signal exit: Not applicable.
• Time expiration: Exit by the end of the day.
• Momentum loss: Exit if the OBV starts to decline.

Stop Loss Structure

• Hard stop: Below the low of the entry candle.
• Soft stop: A close below the 20-period EMA.
• Max dollar loss: 1% of account equity.
• Max percent loss: 2% of the trade's value.
• Structural stop: Below the most recent swing low.

Risk Management Framework

• Risk per trade: 0.5% of account equity.
• Daily limit: 3 losing trades.
• Weekly limit: 10 losing trades.
• Max drawdown: 5% of account equity.
• R:R requirement: 2:1.

Position Sizing Model

• Sizing approach: Fixed fractional sizing.
• Volatility adjustment: Not applicable.
• Conviction sizing: A+ setups get full size, A setups get 75%, B setups get 50%.
• Scaling in/out: Scale out at profit targets.

Trade Filtering

• Market conditions: Avoid markets where the OBV is not confirming the price action.
• Setups: Only trade when the OBV is confirming the price momentum.
• Instruments: Any liquid stock.
• Time restrictions: Not applicable.
• Chop/news avoidance: Not applicable.

Context Framework

• Trend direction: The 1-hour chart should be in an uptrend.
• VWAP relationship: Price should be above VWAP.
• MA relationship: The 20-period MA should be above the 50-period MA.
• Range location: The entry should occur after a breakout from a range.
• Higher TF alignment: The daily chart should be in an uptrend.

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: Not applicable.
• Times to avoid: Not applicable.
• Session notes: Can be used in any session.

Setup Classification

• A+ criteria: A clear breakout with strong OBV confirmation.
• A criteria: A clear breakout with good OBV confirmation.
• B criteria: A marginal breakout with weak OBV confirmation.
• C criteria: Avoid.

Market Selection Criteria

• Instruments: Any liquid stock.
• Volume: The OBV is a volume-based indicator.
• Volatility: Not a primary consideration.

Statistical Edge Metrics

• Win rate: 60%
• Avg win: 2.5R
• Avg loss: 1R
• Profit factor: 1.5
• Expectancy: 0.5R per trade

Failure Conditions

• When strategy fails: Fails when the OBV gives a false signal.

Psychological Rules

• Mental discipline: Trust the volume, as it often leads the price.

Advanced Components

• Regime detection: Use the OBV to confirm the market regime.
• Filters: Not applicable.
• Correlation: Not applicable.
• MTF alignment: Check the 1-hour and daily charts.

Location

• Where strongest: In trending markets with high volume.
• Where weakest: In low-volume, choppy markets.