Aroon Momentum Signal

Entry Logic

• Entry trigger: The Aroon Up line crosses above the Aroon Down line for a long trade, or the Aroon Down line crosses above the Aroon Up line for a short trade.
• Confirmation: The Aroon Up line is above 70 for a long trade, or the Aroon Down line is above 70 for a short trade.
• Timeframe: 30-minute chart.
• Location context: The entry occurs after a period of consolidation.
• Market condition: The market is beginning to trend.

Exit Logic

• Profit targets: No fixed profit targets; ride the trend.
• Scaling out: Not applicable.
• Trailing stop: Use the 20-period EMA as a trailing stop.
• Signal failure exit: Exit if the Aroon lines cross against the trade.
• Opposite signal exit: Not applicable.
• Time expiration: Hold the trade as long as the trend is intact.
• Momentum loss: Exit if the Aroon lines start to converge.

Stop Loss Structure

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

Risk Management Framework

• Risk per trade: 0.5% of account equity.
• Daily limit: 2 losing trades.
• Weekly limit: 8 losing trades.
• Max drawdown: 6% of account equity.
• R:R requirement: Not applicable; this is a trend-following strategy.

Position Sizing Model

• Sizing approach: Fixed fractional sizing.
• Volatility adjustment: Not applicable.
• Conviction sizing: Not applicable.
• Scaling in/out: Not applicable.

Trade Filtering

• Market conditions: Avoid range-bound markets.
• Setups: Only trade clear Aroon signals.
• Instruments: Any liquid stock.
• Time restrictions: Not applicable.
• Chop/news avoidance: Not applicable.

Context Framework

• Trend direction: The Aroon indicator determines the trend direction.
• VWAP relationship: Price should be on the correct side of VWAP.
• MA relationship: The 20-period EMA should be above the 50-period EMA (for longs) or below (for shorts).
• Range location: The entry should occur after a breakout from a range.
• Higher TF alignment: The daily chart should be in a trend.

Trade Management Rules

• Breakeven: Move stop to breakeven after 2R.
• Scale out: Not applicable.
• Add size: Consider adding to the position on pullbacks.
• Fast vs slow moves: Hold through both fast and slow periods.

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 Aroon signal with a strong trend.
• A criteria: A clear Aroon signal with a moderate trend.
• B criteria: A clear Aroon signal with a weak trend.
• C criteria: Avoid.

Market Selection Criteria

• Instruments: Any liquid stock.
• Volume: Not a primary consideration.
• Volatility: Not a primary consideration.

Statistical Edge Metrics

• Win rate: 45%
• Avg win: 4R
• Avg loss: 1R
• Profit factor: 1.8
• Expectancy: 1.3R per trade

Failure Conditions

• When strategy fails: Fails in choppy, non-trending markets.

Psychological Rules

• Mental discipline: Be patient and let the trend unfold.

Advanced Components

• Regime detection: The Aroon indicator is the regime detection tool.
• Filters: Not applicable.
• Correlation: Not applicable.
• MTF alignment: Check the daily chart for trend confirmation.

Location

• Where strongest: In strongly trending markets.
• Where weakest: In range-bound markets.