Mass Index Reversal Momentum

Entry Logic

• Entry trigger: The Mass Index crosses above 27 and then back below 26.5, signaling a potential reversal.
• Confirmation: A reversal candle forms on the chart.
• Timeframe: 30-minute chart.
• Location context: The entry occurs after a strong trend.
• Market condition: The market is overextended and due for a correction.

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 price continues to trend in the original direction.
• Opposite signal exit: Not applicable.
• Time expiration: Exit by the end of the day.
• Momentum loss: Not applicable.

Stop Loss Structure

• Hard stop: Above the high of the reversal candle (for a short) or below the low (for a long).
• Soft stop: A close above the reversal candle's high (for a short) or below the low (for a long).
• Max dollar loss: 1% of account equity.
• Max percent loss: 2% of the trade's value.
• Structural stop: Above the most recent swing high (for a short) or below the low (for a long).

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: Not applicable.
• Scaling in/out: Scale out at profit targets.

Trade Filtering

• Market conditions: Avoid trading in the middle of a strong trend.
• Setups: Only trade clear Mass Index reversal signals.
• Instruments: Any liquid stock.
• Time restrictions: Not applicable.
• Chop/news avoidance: Not applicable.

Context Framework

• Trend direction: This is a counter-trend strategy.
• VWAP relationship: Price should be far from the VWAP.
• MA relationship: Price should be far from its moving averages.
• Range location: The entry should occur at the top or bottom of a range.
• Higher TF alignment: The daily chart should be overbought or oversold.

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: This is a counter-trend strategy, so expect fast moves.

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 Mass Index reversal signal with a strong reversal candle.
• A criteria: A clear Mass Index reversal signal with a good reversal candle.
• B criteria: A marginal Mass Index reversal signal with a weak reversal candle.
• C criteria: Avoid.

Market Selection Criteria

• Instruments: Any liquid stock.
• Volume: Not a primary consideration.
• Volatility: High volatility is preferred.

Statistical Edge Metrics

• Win rate: 70%
• Avg win: 1.5R
• Avg loss: 1R
• Profit factor: 1.05
• Expectancy: 0.05R per trade

Failure Conditions

• When strategy fails: Fails when the trend is too strong and the reversal signal is ignored.

Psychological Rules

• Mental discipline: It can be difficult to trade against the trend.

Advanced Components

• Regime detection: The Mass Index is the regime detection tool.
• Filters: Not applicable.
• Correlation: Not applicable.
• MTF alignment: Check the daily chart for overbought/oversold conditions.

Location

• Where strongest: At the end of a strong trend.
• Where weakest: In the middle of a strong trend.