Anchored Moving Average Trade

Entry Logic

• Entry trigger: Price pulls back to an anchored moving average (e.g., anchored to a significant high or low).
• Confirmation: A reversal candle pattern forms at the anchored moving average.
• Timeframe: 1-hour chart.
• Location context: The anchored moving average is acting as a key support or resistance level.
• Market condition: The market is respecting the anchored moving average.

Exit Logic

• Profit target: The next significant support/resistance level.
• Scaling out: Not recommended.
• Trailing stop: Trail the stop on the other side of the anchored moving average.
• Signal failure: Exit if the price closes on the wrong side of the anchored moving average.
• Opposite signal: Exit on a confirmed reversal signal.
• Time expiration: None.
• Momentum loss: Exit if momentum fades.

Stop Loss Structure

• Hard stop: 1.5 ATR from the entry price.
• Soft stop: A close on the wrong side of the anchored moving average.
• Max dollar loss: $200 per trade.
• Max percent loss: 2% of account.
• Structural stop: Below the most recent swing low (for longs) or above the swing high (for shorts).

Risk Management Framework

• Risk per trade: 1.5% of account.
• Daily limit: 2 losing trades.
• Weekly limit: 5% drawdown.
• Max drawdown: 15%.
• R:R requirement: Minimum 2:1.

Position Sizing Model

• Sizing approach: Fixed fractional (1.5% of account).
• Volatility adjustment: Adjust size based on ATR.
• Conviction sizing: None.
• Scaling in: Not recommended.
• Scaling out: Not recommended.

Trade Filtering

• Market conditions: Avoid markets that are not respecting the anchored moving average.
• Setups: Only take pullbacks to the anchored moving average.
• Instruments: Any liquid instrument.
• Time restrictions: None.
• Chop/news avoidance: Avoid trading around major news.

Context Framework

• Trend direction: The trend is defined by the slope of the anchored moving average.
• VWAP relationship: Not relevant for this strategy.
• MA relationship: The anchored moving average is a key level.
• Range location: The trade is taken at a key support or resistance level.
• Higher TF alignment: The higher timeframe chart should confirm the importance of the anchored moving average.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1.5R move.
• Scale out: Not recommended.
• Add size: Not recommended.
• Fast vs slow moves: Let the trade run as long as the anchored moving average is respected.

Time Rules

• Optimal window: Any time the market is respecting the anchored moving average.
• Times to avoid: When the market is ignoring the anchored moving average.
• Session notes: Works well in all sessions.

Setup Classification

• A+ setup: A perfect pullback to the anchored moving average with a strong reversal candle.
• A setup: A decent pullback with a good reversal candle.
• B setup: A pullback with a weak reversal candle.
• C setup: Avoid.

Market Selection Criteria

• Instruments: Any liquid instrument.
• Volume: High.
• Volatility: Moderate.

Statistical Edge Metrics

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

Failure Conditions

• The strategy fails when the market stops respecting the anchored moving average.
• Avoid taking trades if the anchored moving average is not clearly acting as support or resistance.

Psychological Rules

• Be patient and wait for the pullback to the anchored moving average.
• Trust the significance of the anchored moving average.

Advanced Components

• Regime detection: Use the slope of the anchored moving average to determine the trend.
• Filters: Only take trades in the direction of the slope.
• Correlation: Be aware of market correlations.
• MTF alignment: Check the higher timeframe chart for confirmation.

Location

• Strongest: When the market is clearly respecting the anchored moving average.
• Weakest: When the market is ignoring the anchored moving average.