Moving Average Retest After Cross

Entry Logic

• Entry trigger: A moving average cross occurs (e.g., 9/20 EMA cross), and then price retests the moving averages.
• Confirmation: A reversal candle pattern forms at the retest.
• Timeframe: 15-minute chart.
• Location context: The retest provides a lower-risk entry into the new trend.
• Market condition: A new trend has just begun.

Exit Logic

• Profit target: 2R or the next significant support/resistance level.
• Scaling out: Scale out 50% at 1R.
• Trailing stop: Trail the stop on the other side of the moving averages.
• Signal failure: Exit if the moving averages cross back.
• Opposite signal: Exit on a reversal signal.
• Time expiration: None.
• Momentum loss: Exit if momentum fades.

Stop Loss Structure

• Hard stop: Below the low of the retest candle (for longs) or above the high (for shorts).
• Soft stop: A close on the wrong side of the moving averages.
• Max dollar loss: $150 per trade.
• Max percent loss: 1.5% of account.
• Structural stop: Below the low of the retest.

Risk Management Framework

• Risk per trade: 1% of account.
• Daily limit: 3 losing trades.
• Weekly limit: 5% drawdown.
• Max drawdown: 15%.
• R:R requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional (1% of account).
• Volatility adjustment: Adjust size based on ATR.
• Conviction sizing: A+ setups get 1.5% risk.
• Scaling in: Not recommended.
• Scaling out: At 1R and 2R.

Trade Filtering

• Market conditions: Avoid taking retests in a choppy market.
• Setups: Only take retests after a clear moving average cross.
• Instruments: Any liquid instrument.
• Time restrictions: None.
• Chop/news avoidance: Avoid trading around major news.

Context Framework

• Trend direction: A new trend has just begun.
• VWAP relationship: The retest should be in the direction of VWAP.
• MA relationship: The moving averages have just crossed.
• Range location: The trade is taken on a pullback after a breakout.
• Higher TF alignment: The higher timeframe chart should confirm the new trend.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale out: At 1R and 2R.
• Add size: Not recommended.
• Fast vs slow moves: Let the trade run in the new trend.

Time Rules

• Optimal window: Any time after a moving average cross.
• Times to avoid: Choppy, non-trending periods.
• Session notes: Works well in all sessions.

Setup Classification

• A+ setup: A perfect retest with a strong reversal candle.
• A setup: A decent retest with a good reversal candle.
• B setup: A weak retest.
• C setup: Avoid.

Market Selection Criteria

• Instruments: Any liquid instrument.
• Volume: High.
• Volatility: Moderate.

Statistical Edge Metrics

• Win rate: 60%.
• Avg win: 1.5R.
• Avg loss: 1R.
• Profit factor: 1.4.
• Expectancy: 0.4R.

Failure Conditions

• The strategy fails when the new trend fails to materialize.
• Avoid taking retests if the moving average cross was not clear.

Psychological Rules

• Be patient and wait for the retest.
• Do not chase the initial cross.

Advanced Components

• Regime detection: Use the ADX to confirm the new trend.
• Filters: Only take trades if the ADX is rising.
• Correlation: Be aware of market correlations.
• MTF alignment: Check the higher timeframe chart for confirmation.

Location

• Strongest: At the beginning of a new trend.
• Weakest: In a choppy, sideways market.