9/20 EMA Cross Momentum

Entry Logic

• Entry trigger: The 9 EMA crosses above the 20 EMA.
• Confirmation: A bullish candle closes above both the 9 and 20 EMAs.
• Timeframe: 15-minute chart.
• Location context: The cross occurs above the 50 SMA.
• Market condition: A new trend is beginning.

Exit Logic

• Profit target: 3R or a major resistance level.
• Scaling out: Not recommended.
• Trailing stop: Trail the stop below the 20 EMA.
• Signal failure: Exit if the 9 EMA crosses back below the 20 EMA.
• Opposite signal: Exit on a 9/20 EMA cross short signal.
• Time expiration: Hold as long as the trend is intact.
• Momentum loss: Exit if the distance between the 9 and 20 EMAs starts to shrink.

Stop Loss Structure

• Hard stop: Below the low of the candle before the cross.
• Soft stop: A close below the 20 EMA.
• Max dollar loss: $150 per trade.
• Max percent loss: 1.5% of account.
• Structural stop: Below the most recent swing low.

Risk Management Framework

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

Position Sizing Model

• Sizing approach: Fixed fractional (1% of account).
• Volatility adjustment: None.
• Conviction sizing: All setups are treated equally.
• Scaling in: Add to the position on a successful retest of the 20 EMA.
• Scaling out: Not recommended.

Trade Filtering

• Market conditions: Avoid taking signals in a sideways market.
• Setups: Only take the first cross after a prolonged downtrend or consolidation.
• Instruments: Major forex pairs and stock indices.
• Time restrictions: None.
• Chop/news avoidance: Avoid trading around high-impact news.

Context Framework

• Trend direction: A new uptrend is starting.
• VWAP relationship: The cross occurs near VWAP.
• MA relationship: The 50 SMA is starting to slope upwards.
• Range location: The trade is taken near the bottom of the daily range.
• Higher TF alignment: The 1-hour chart shows a potential trend reversal.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1.5R move.
• Scale out: Not recommended.
• Add size: On a successful retest of the 20 EMA.
• Fast vs slow moves: Hold through both fast and slow moves as long as the trend is intact.

Time Rules

• Optimal window: Any time a new trend is forming.
• Times to avoid: Low-volume periods.
• Session notes: Can be traded in any session.

Setup Classification

• A+ setup: The first cross after a long downtrend, with high volume.
• A setup: A cross that occurs after a period of consolidation.
• B setup: A cross that occurs late in an existing trend.
• C setup: Avoid.

Market Selection Criteria

• Instruments: EUR/USD, GBP/USD, SPX, NDX.
• Volume: High.
• Volatility: Moderate.

Statistical Edge Metrics

• Win rate: 40%.
• Avg win: 3R.
• Avg loss: 1R.
• Profit factor: 1.2.
• Expectancy: 0.2R.

Failure Conditions

• The strategy fails when the market is in a choppy, sideways range.
• Avoid taking signals if the 50 SMA is pointing down.

Psychological Rules

• Have the conviction to hold the trade as long as the trend is intact.
• Do not exit prematurely.

Advanced Components

• Regime detection: Use the ADX to confirm a new trend is starting.
• Filters: Only take trades if the ADX is above 25.
• Correlation: Be aware of correlations between forex pairs.
• MTF alignment: Look for confirmation on the 1-hour chart.

Location

• Strongest: At the beginning of a new trend.
• Weakest: In a sideways market.