Volume Weighted Breakout

Entry Logic

• Enter long on a breakout above a resistance level that has a high concentration of volume.
• Confirmation: The breakout must occur on high volume.
• Timeframe: 15-minute chart.
• Location: At a high-volume node.
• Market Condition: A trending or range-bound market.

Exit Logic

• Profit Target: 2R.
• Scaling Out: Sell 50% at 2R, trail the rest.
• Trailing Stop: The 20-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 breakout level.
• Max Dollar Loss: $100 per trade.
• Max Percent Loss: 1% of account.
• Structural Stop: Below the breakout level.

Risk Management Framework

• Risk Per Trade: 0.5% of account.
• Daily Limit: 3 losing trades.
• Weekly Limit: 5% drawdown.
• Max Drawdown: 15%.
• R:R Requirement: Minimum 2:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.
• Volatility Adjustment: Reduce size in highly volatile markets.
• Conviction Sizing: Full size on A+ setups.
• Scaling In: Not recommended.
• Scaling Out: At 2R and 3R.

Trade Filtering

• Market Conditions: Avoid choppy, low-volume markets.
• Setups: Only trade breakouts from high-volume nodes.
• Instruments: High-volume stocks.
• Time Restrictions: No restrictions.
• Chop/News Avoidance: Avoid trading around news.

Context Framework

• Trend Direction: Trade in the direction of the daily trend.
• VWAP Relationship: Price should be above VWAP for long trades.
• MA Relationship: Price should be above the 50-period SMA.
• Range Location: Breakouts from the top of a range are preferred.
• Higher TF Alignment: The daily and hourly charts should show a bullish bias.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale Out: At 2R and 3R.
• Add Size: Not recommended.
• Fast vs Slow Moves: Let fast moves run.

Time Rules

• Optimal Window: Any time during the day.
• Times to Avoid: None.
• Session Notes: Works well in all sessions.

Setup Classification

• A+ Setup: A clear breakout from a high-volume node with massive volume.
• A Setup: A good breakout with decent volume.
• B Setup: A breakout with questionable volume.
• C Setup: Avoid weak breakouts.

Market Selection Criteria

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

Statistical Edge Metrics

• Win Rate: 48%.
• Avg Win: 2.5R.
• Avg Loss: 1R.
• Profit Factor: 1.2.
• Expectancy: 0.2R per trade.

Failure Conditions

• The strategy fails in choppy, low-volume markets.
• Avoid breakouts that occur on low volume.

Psychological Rules

• Be patient and wait for the right setup.
• Do not chase breakouts.

Advanced Components

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

Location

• Strongest: At key support and resistance levels.
• Weakest: In the middle of a range.