First Trading Day of Month

Entry Logic

• Entry trigger: A strong trend on the first trading day of the new month.
• Confirmation: Institutional buying or selling pressure.
• Timeframe: 60-minute chart.
• Location context: Trade in the direction of the new money flow.
• Market condition: A market that is receiving new fund inflows at the beginning of the month.

Exit Logic

• Profit target: 2R or the end of the day.
• Scaling out: Scale out 50% at 1R.
• Trailing stop: Trail the remaining position with the 20 EMA on the 15-minute chart.
• Signal failure exit: Exit if the trend reverses.
• Opposite signal exit: Not applicable.
• Time expiration: Exit by the close.
• Momentum loss: Exit if the trend stalls.

Stop Loss Structure

• Hard stop: Below the low of the first hour for longs, above the high for shorts.
• Soft stop: Not used.
• Max dollar loss: $200 per trade.
• Max percent loss: 1% of account.
• Structural stop: Below a key support/resistance level.

Risk Management Framework

• Risk per trade: 1% of account.
• Daily limit: 2 trades.
• Weekly limit: 2% drawdown.
• Max drawdown: 6%.
• R:R requirement: Minimum 2:1.

Position Sizing Model

• Sizing approach: Risk-based.
• Volatility adjustment: Not applicable.
• Conviction sizing: Not applicable.
• Scaling in/out: No scaling in.

Trade Filtering

• Market conditions: Only trade on the first trading day of the month.
• Setups: Look for a strong, clear trend.
• Instruments: Large-cap stocks and major market ETFs.
• Time restrictions: Trade after the first hour of the session.
• Chop/news avoidance: Be aware of any economic data releases on the first of the month.

Context Framework

• Trend direction: Trade with the dominant trend of the day.
• VWAP relationship: Enter long above VWAP, short below VWAP.
• Moving average relationship: Price should be trending with the key moving averages.
• Range location: Trade the breakout of the opening range.
• Higher TF alignment: The daily chart should provide context.

Trade Management Rules

• Breakeven: Move stop to breakeven after 1R of profit.
• Scale out: At 1R and 2R.
• Add size: Not applicable.
• Fast vs slow moves: Be prepared for a strong, persistent trend.

Time Rules

• Optimal trading window: After 10:30 AM EST on the first trading day of the month.
• Times to avoid: The opening hour.
• Session notes: This is a seasonal trade based on the tendency for new funds to be put to work at the beginning of the month.

Setup Classification

• A+ criteria: A strong, clear trend with high volume.
• A criteria: A moderate trend with good volume.
• B criteria: A weak trend.
• C criteria: A choppy, directionless market (avoid).

Market Selection Criteria

• Instruments: SPY, QQQ, and other broad market ETFs.
• Volume: High volume is a positive sign.
• Volatility: Moderate volatility is ideal.

Statistical Edge Metrics

• Win rate: 55%.
• Avg win: 2R.
• Avg loss: 1R.
• Profit factor: 1.1.
• Expectancy: 0.1R per trade.

Failure Conditions

• Fails if the expected new money inflows do not materialize or if there is a negative catalyst.
• Avoid on days with major negative news.

Psychological Rules

• Requires the patience to wait for the trend to establish itself.
• Must be willing to hold a trade for most of the day.

Advanced Components

• Regime detection: Not applicable.
• Filters: Filter trades based on the performance of the previous month.
• Correlation: Be aware of the overall market sentiment.
• MTF alignment: The daily and weekly charts should provide context.

Location

• Strongest: After a positive month-end close.
• Weakest: After a negative month-end close.