3. EMA Stacking Momentum Entry

Entry Logic

5 EMA > 10 EMA > 20 EMA (bullish) or 5 EMA < 10 EMA < 20 EMA (bearish). Price pulls back to 10 EMA. Confirmation is a rejection candle at 10 EMA with increased volume. Timeframe is 2-minute. Location context is a strong trending move. Market condition is strong momentum.

Exit Logic

Profit target is prior swing high/low. Scale out 60% at 1R. Trail stop below 5 EMA. Signal failure if 10 EMA is broken and closed. Time expiration at 20 minutes if no movement. Momentum loss if 5 EMA flattens.

Stop Loss Structure

Hard stop is 0.2% below 20 EMA. Soft stop is a close below 10 EMA. Max dollar loss is $75 per trade. Max percent loss is 0.15% of capital. Structural stop is below the last higher low/lower high.

Risk Management Framework

Risk 0.3% per trade. Daily limit is 1.5% loss. Weekly limit is 4% loss. Max drawdown is 8%. R:R requirement is 1.2:1 minimum.

Position Sizing Model

Size to risk 0.3% of capital. Adjust for volatility using 5-period ATR. Conviction sizing increases size by 20% for A+ setups. Scale in 20% on strong price action.

Trade Filtering

Only trade strong trending stocks. Avoid choppy stocks. Avoid stocks with low relative volume. Trade only highly liquid stocks.

Context Framework

Higher timeframe (15-minute) shows clear trend. Price must be trending above/below VWAP. EMAs must be clearly separated and angled. Entry must be in the direction of the daily trend.

Trade Management Rules

Move to breakeven at 0.75R. Scale out 60% at 1.2R. Do not add size unless momentum accelerates. Manage fast moves with tight stops and quick targets. Manage slow moves by exiting.

Time Rules

Optimal window 9:30 AM - 10:30 AM EST. Avoid 11:30 AM - 1:00 PM EST. Avoid last hour.

Setup Classification

A+: Perfect EMA stack, high volume, strong rejection. A: Good EMA stack, good volume, clear rejection. B: Acceptable EMA stack, moderate volume, weak rejection. C: Avoid.

Market Selection Criteria

Instruments: High-beta stocks (TSLA, NVDA, AMD). Volume must be > 10 million shares. Volatility must be > 3% daily range.

Statistical Edge Metrics

Win rate 60%. Avg win 1.2R. Avg loss 0.8R. Profit factor 1.35. Expectancy 0.18R.

Failure Conditions

Strategy fails during trend reversals. Strategy fails in range-bound markets. Strategy fails on low volume pullbacks.

Psychological Rules

Be decisive. Do not hesitate. Cut losses quickly. Protect capital.

Advanced Components

Regime detection uses Directional Movement Index (DMI) > 25. Filter for 15-minute EMA alignment. Correlation check with sector leaders.

Location

Strongest at market open. Weakest during trend exhaustion.