Order Flow Momentum Confirmation

Entry Logic

• Entry is a long position when there is a surge in aggressive buy orders, confirmed by a breakout on the price chart.
• Confirmation is a high-volume breakout bar with a strong positive delta.
• Timeframe is the 5-minute chart.
• Location is at a key resistance level being broken.
• Market is in an uptrend.

Exit Logic

• Profit target is the next resistance level.
• Do not scale out.
• Trail the stop loss below the low of the breakout bar.
• Exit if there is a surge in aggressive sell orders.
• Exit on a bearish reversal pattern.
• Exit if the price does not move up within 3 bars.
• Exit if buying momentum stalls.

Stop Loss Structure

• Hard stop is placed below the low of the breakout bar.
• Soft stop is a close back below the broken resistance level.
• Maximum dollar loss is $200 per trade.
• Maximum percent loss is 2% of the account.
• Structural stop is below the broken resistance level.

Risk Management Framework

• Risk 1.5% of the account per trade.
• Daily loss limit is 4.5% of the account.
• Weekly loss limit is 9% of the account.
• Maximum drawdown is 25%.
• Risk-reward ratio must be at least 1:1.5.

Position Sizing Model

• Use a fixed fractional position sizing model.
• No volatility adjustment.
• Full size for all setups.
• Do not scale in or out.

Trade Filtering

• Avoid trading in downtrends.
• Only trade when there is clear order flow confirmation.
• Trade only highly liquid instruments.
• Avoid trading during news events.
• Do not trade in choppy markets.

Context Framework

• Trend is up.
• Price is above VWAP.
• Price is above the 50 EMA.
• Location is at a key resistance level being broken.
• The higher timeframe chart (60-minute) shows a clear uptrend.

Trade Management Rules

• Move stop to breakeven when the price reaches a 1:1 risk-reward ratio.
• Do not scale out.
• Do not add to the position.
• Let the trade run if buying momentum is strong.

Time Rules

• Optimal trading window is from 9:30 AM to 11:30 AM EST.
• Avoid trading in the afternoon.
• The strategy works best on trending days with strong momentum.

Setup Classification

• A+ setup: High-volume breakout with strong order flow confirmation in a strong uptrend.
• A setup: Breakout with moderate order flow confirmation in a moderate uptrend.
• B setup: Breakout with weak order flow confirmation.
• C setup: No clear order flow confirmation.

Market Selection Criteria

• Trade ES, NQ, and CL futures.
• High liquidity is essential.
• High volatility is preferred.

Statistical Edge Metrics

• Expected win rate is 50%.
• Average win is 3R.
• Average loss is 1R.
• Profit factor is 1.5.
• Expectancy per trade is 0.5R.

Failure Conditions

• The strategy fails if the breakout is a false one.
• Avoid trading when there is a lack of order flow confirmation.

Psychological Rules

• Be decisive and act quickly on the confirmation.
• Do not chase the price if you miss the entry.

Advanced Components

• Use a footprint chart or a delta indicator to see the order flow.
• Use a trend filter to confirm the uptrend.
• Do not trade correlated instruments at the same time.
• The 60-minute chart must confirm the uptrend.

Location

• Strongest at the beginning of a new trend.
• Weakest in a mature trend.
• The location of the breakout within the trend is important.