EMA Stacking Momentum Entry

Entry Logic

• Entry trigger: A stack of short-term EMAs (e.g., 5, 8, 13) are all aligned and pointing in the same direction.
• Confirmation: Price is trading on the correct side of the stacked EMAs.
• Timeframe: 5-minute chart.
• Location context: The EMAs are tightly stacked and moving in unison.
• Market condition: A very strong, momentum-driven trend.

Exit Logic

• Profit target: 2R or when the EMAs start to unstack.
• Scaling out: Not recommended.
• Trailing stop: Trail the stop on the other side of the stacked EMAs.
• Signal failure: Exit if the EMAs start to unstack or cross.
• Opposite signal: Exit on a reversal signal.
• Time expiration: Exit by the end of the day.
• Momentum loss: Exit if the EMAs flatten out.

Stop Loss Structure

• Hard stop: On the other side of the stacked EMAs.
• Soft stop: A close on the wrong side of the stacked EMAs.
• Max dollar loss: $100 per trade.
• Max percent loss: 1% of account.
• Structural stop: Not applicable.

Risk Management Framework

• Risk per trade: 0.75% of account.
• Daily limit: 3 losing trades.
• Weekly limit: 4% drawdown.
• Max drawdown: 12%.
• R:R requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional (0.75% of account).
• Volatility adjustment: Adjust size based on ATR.
• Conviction sizing: None.
• Scaling in: Not recommended.
• Scaling out: Not recommended.

Trade Filtering

• Market conditions: Only trade in very strong, momentum-driven trends.
• Setups: Only take trades when the EMAs are tightly stacked.
• Instruments: High-beta stocks and volatile ETFs.
• Time restrictions: Only trade during high-volume periods.
• Chop/news avoidance: Avoid trading around news.

Context Framework

• Trend direction: The trend is extremely strong.
• VWAP relationship: Trade in the direction of VWAP.
• MA relationship: The short-term EMAs are tightly stacked.
• Range location: The trade is taken in the direction of the trend.
• Higher TF alignment: The 15-minute chart should confirm the strong trend.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale out: Not recommended.
• Add size: Not recommended.
• Fast vs slow moves: This strategy is only for fast moves.

Time Rules

• Optimal window: 9:30 AM - 11:00 AM EST.
• Times to avoid: Low-volume, choppy periods.
• Session notes: Best in the morning session.

Setup Classification

• A+ setup: Tightly stacked EMAs with a steep slope.
• A setup: Decently stacked EMAs.
• B setup: Loosely stacked EMAs.
• C setup: Avoid.

Market Selection Criteria

• Instruments: TSLA, NVDA, and other high-beta stocks.
• Volume: Very high.
• Volatility: Very high.

Statistical Edge Metrics

• Win rate: 55%.
• Avg win: 1.8R.
• Avg loss: 1R.
• Profit factor: 1.0.
• Expectancy: 0.0R.

Failure Conditions

• The strategy fails when the trend loses momentum.
• Avoid taking trades if the EMAs are not tightly stacked.

Psychological Rules

• Be prepared for fast moves and have a plan to take profits.
• Do not get greedy.

Advanced Components

• Regime detection: Use the slope of the EMAs to determine the trend strength.
• Filters: Only trade when the slope is steep.
• Correlation: Be aware of market correlations.
• MTF alignment: Check the 15-minute chart for confirmation.

Location

• Strongest: In a very strong, momentum-driven trend.
• Weakest: In a choppy, sideways market.