Break of Structure Short

Entry Logic

• Entry trigger: Price breaks below a previous swing low, creating a lower low.
• Confirmation: The breakout candle closes strongly below the swing low with high volume.
• Timeframe: 15-minute chart.
• Location context: Price is below the 50-period SMA.
• Market condition: Downtrend or range expansion.

Exit Logic

• Profit target: 1.5R, with a secondary target at the next key support level.
• Scaling out: Scale out 50% at 1.5R.
• Trailing stop: Trail the stop loss above the high of the previous candle.
• Signal failure exit: Exit if price closes back above the broken swing low.
• Opposite signal exit: Exit on a confirmed higher high.
• Time expiration: Exit if the trade is open for more than 3 hours.
• Momentum loss: Exit if momentum indicators show divergence.

Stop Loss Structure

• Hard stop: 1 ATR above the high of the breakout candle.
• Soft stop: A close above the broken swing low.
• Max dollar loss: $150 per trade.
• Max percent loss: 1.5% of account.
• Structural stop: Above the most recent swing high.

Risk Management Framework

• Risk per trade: 0.75% of account.
• Daily limit: 2 losing trades.
• Weekly limit: 4% drawdown.
• Max drawdown: 12%.
• R:R requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional sizing.
• Volatility adjustment: Reduce size if ATR is 50% above average.
• Conviction sizing: Full size for A+ setups, half size for A setups.
• Scaling in: Not recommended.
• Scaling out: Scale out 50% at 1.5R.

Trade Filtering

• Market conditions to avoid: Strong uptrends.
• Setups required: Clear swing low to act as a breakout level.
• Instruments: High-beta stocks and cryptocurrencies.
• Time restrictions: Avoid trading during low-volume periods.
• Chop/news avoidance: Avoid trading around major news events.

Context Framework

• Trend direction: Downtrend.
• VWAP relationship: Price below VWAP.
• MA relationship: Price below 50-period SMA.
• Range location: Breaking out of a range.
• Higher TF alignment: 1-hour and 4-hour charts show a downtrend.

Trade Management Rules

• Breakeven: Move stop to breakeven after price moves 1R in your favor.
• Scale out: Scale out 50% at 1.5R.
• Add size: Not recommended.
• Fast vs slow moves: Let profits run on fast moves.

Time Rules

• Optimal window: 10:00 AM to 12:00 PM EST.
• Times to avoid: First 30 minutes of the session.
• Session notes: Strategy works well in volatile sessions.

Setup Classification

• A+ criteria: Strong breakout with high volume and a retest of the broken level.
• A criteria: Strong breakout with high volume.
• B criteria: Breakout with average volume.
• C criteria: Breakout with low volume.

Market Selection Criteria

• Instruments: TSLA, NVDA, BTC-USD.
• Volume: Minimum 2 million shares traded per day.
• Volatility: High ATR.

Statistical Edge Metrics

• Win rate: 55%.
• Avg win: 2R.
• Avg loss: 1R.
• Profit factor: 1.1.
• Expectancy: 0.1R per trade.

Failure Conditions

• Strategy fails in choppy markets with false breakouts.
• Avoid using this strategy if the higher timeframes are in an uptrend.

Psychological Rules

• Avoid chasing breakouts.
• Be prepared for false breakouts.

Advanced Components

• Regime detection: Use a volatility filter to identify expanding markets.
• Filters: Avoid trading if the VIX is above 35.
• Correlation: Avoid trading highly correlated instruments at the same time.
• MTF alignment: Ensure the higher timeframes are in a downtrend.

Location

• Strongest: In a strong, established downtrend with clear breakout levels.
• Weakest: In a choppy, range-bound market.