Volume Gap Analysis

Entry Logic

• Enter long when the price gaps up on high volume.
• Confirmation: The price must hold above the gap.
• Timeframe: Daily chart.
• Location: Not applicable.
• Market Condition: A trending market.

Exit Logic

• Profit Target: 2R.
• Scaling Out: Not recommended.
• Trailing Stop: A close below the gap.
• Signal Failure: A close below the gap.
• Opposite Signal: A bearish reversal candle with high volume.
• Time Expiration: Not applicable.
• Momentum Loss: A failure to make a new high.

Stop Loss Structure

• Hard Stop: Below the low of the gap.
• Soft Stop: A close below the gap.
• Max Dollar Loss: $150 per trade.
• Max Percent Loss: 1.5% of account.
• Structural Stop: Below the gap.

Risk Management Framework

• Risk Per Trade: 0.75% 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.
• 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 trending markets.
• Setups: Look for volume gaps.
• Instruments: High-volume stocks.
• Time Restrictions: Only trade at the open.
• Chop/News Avoidance: Avoid trading around news.

Context Framework

• Trend Direction: Trade in the direction of the daily trend.
• VWAP Relationship: Not applicable.
• MA Relationship: Price should be above the 50-day SMA.
• Range Location: Not applicable.
• Higher TF Alignment: Not applicable.

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: At the open of the market.
• Times to Avoid: Any other time.
• Session Notes: Only works at the open.

Setup Classification

• A+ Setup: A large gap up on massive volume.
• A Setup: A decent gap up on high volume.
• B Setup: A small gap up or questionable volume.
• C Setup: Avoid weak gaps.

Market Selection Criteria

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

Statistical Edge Metrics

• Win Rate: 50%.
• Avg Win: 2.5R.
• Avg Loss: 1R.
• Profit Factor: 1.25.
• Expectancy: 0.25R per trade.

Failure Conditions

• The strategy fails if the gap is filled.
• Avoid trading if the volume is not significant.

Psychological Rules

• Be prepared for a wide stop loss.
• Do not chase the price after the gap.

Advanced Components

• Regime Detection: Use a trend filter.
• Filters: Use a volume filter.
• Correlation: Avoid correlated instruments.
• MTF Alignment: Not applicable.

Location

• Strongest: At the open of the market.
• Weakest: Any other time.