Accumulation/Distribution Line Trade

Entry Logic

• Enter long when the Accumulation/Distribution (A/D) line is rising while the price is consolidating.
• Confirmation: A breakout above the consolidation range.
• Timeframe: 60-minute chart.
• Location: In a consolidation range.
• Market Condition: A sideways market.

Exit Logic

• Profit Target: 2R.
• Scaling Out: Not recommended.
• Trailing Stop: A close below the 20-period EMA.
• Signal Failure: A close back inside the consolidation range.
• 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 consolidation range.
• Soft Stop: A close back inside the consolidation range.
• Max Dollar Loss: $100 per trade.
• Max Percent Loss: 1% of account.
• Structural Stop: Below the consolidation range.

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: 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 consolidation ranges.
• Setups: Look for a rising A/D line during consolidation.
• Instruments: High-volume stocks.
• Time Restrictions: No restrictions.
• Chop/News Avoidance: Avoid trading around news.

Context Framework

• Trend Direction: Not applicable.
• VWAP Relationship: Not applicable.
• MA Relationship: Not applicable.
• Range Location: In a consolidation range.
• Higher TF Alignment: The daily chart should also be in a consolidation phase.

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

Setup Classification

• A+ Setup: A clear consolidation with a strongly rising A/D line.
• A Setup: A decent consolidation with a rising A/D line.
• B Setup: A questionable consolidation or A/D line.
• C Setup: Avoid weak setups.

Market Selection Criteria

• Instruments: Stocks with a daily volume of over 1 million shares.
• Volume: Not applicable.
• Volatility: Low to moderate volatility.

Statistical Edge Metrics

• Win Rate: 55%.
• Avg Win: 2R.
• Avg Loss: 1R.
• Profit Factor: 1.1.
• Expectancy: 0.1R per trade.

Failure Conditions

• The strategy fails if the breakout is false.
• Avoid trading if the A/D line is not clearly rising.

Psychological Rules

• Be patient and wait for the breakout.
• Do not get chopped up in the consolidation.

Advanced Components

• Regime Detection: Use a range filter.
• Filters: Not applicable.
• Correlation: Avoid correlated instruments.
• MTF Alignment: Ensure the higher timeframes are also in consolidation.

Location

• Strongest: In a well-defined consolidation range.
• Weakest: In a strong trend.