Relative Volume Momentum

Entry Logic

• Enter long when the relative volume is above 2.0 and the price is breaking out to new highs.
• Confirmation: The breakout candle must be bullish and close strong.
• Timeframe: 5-minute chart.
• Location: Near the high of the day.
• Market Condition: A strong uptrend.

Exit Logic

• Profit Target: 2R.
• Scaling Out: Not recommended.
• Trailing Stop: The 10-period EMA.
• Signal Failure: A close back below the breakout level.
• Opposite Signal: A bearish reversal candle with high volume.
• Time Expiration: End of the day.
• Momentum Loss: A failure to make a new high.

Stop Loss Structure

• Hard Stop: Below the low of the breakout candle.
• Soft Stop: A close below the 10-period EMA.
• Max Dollar Loss: $80 per trade.
• Max Percent Loss: 0.8% of account.
• Structural Stop: Below the breakout level.

Risk Management Framework

• Risk Per Trade: 0.4% of account.
• Daily Limit: 4 losing trades.
• Weekly Limit: 5% drawdown.
• Max Drawdown: 15%.
• R:R Requirement: Minimum 2:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.
• Volatility Adjustment: No adjustment needed.
• Conviction Sizing: Full size on A+ setups.
• Scaling In: Not recommended.
• Scaling Out: Not recommended.

Trade Filtering

• Market Conditions: Only trade in strong uptrends.
• Setups: Look for breakouts with high relative volume.
• Instruments: High-volume stocks.
• Time Restrictions: Best in the morning session.
• Chop/News Avoidance: Avoid trading around news.

Context Framework

• Trend Direction: Must be in a clear uptrend.
• VWAP Relationship: Price should be above VWAP.
• MA Relationship: Price should be above the 20-period and 50-period SMAs.
• Range Location: Not applicable.
• Higher TF Alignment: The daily chart should be in an uptrend.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale Out: Not recommended.
• Add Size: Not recommended.
• Fast vs Slow Moves: Let fast moves run.

Time Rules

• Optimal Window: 9:30 AM to 11:00 AM EST.
• Times to Avoid: Lunchtime and the afternoon session.
• Session Notes: Strongest in the morning.

Setup Classification

• A+ Setup: A clear breakout with relative volume above 3.0.
• A Setup: A good breakout with relative volume above 2.0.
• B Setup: A breakout with relative volume below 2.0.
• C Setup: Avoid breakouts with low relative volume.

Market Selection Criteria

• Instruments: Stocks with a daily volume of over 2 million shares.
• Volume: High relative volume.
• Volatility: High volatility.

Statistical Edge Metrics

• Win Rate: 50%.
• Avg Win: 2R.
• Avg Loss: 1R.
• Profit Factor: 1.0.
• Expectancy: 0.0R per trade.

Failure Conditions

• The strategy fails in choppy, sideways markets.
• Avoid trading if the relative volume is low.

Psychological Rules

• Be aggressive when the conditions are right.
• Do not chase breakouts.

Advanced Components

• Regime Detection: Use a trend filter.
• Filters: Use a relative volume filter.
• Correlation: Avoid correlated instruments.
• MTF Alignment: Ensure higher timeframe alignment.

Location

• Strongest: At the open of the market.
• Weakest: In the afternoon session.