Panic Selling Opportunity

Entry Logic

• Entry trigger: Buy into a panic sell-off when the VIX spikes above 40.
• Confirmation: A bullish reversal candle on the 15-minute chart.
• Timeframe: 15-minute chart for entry, daily for context.
• Location: At a major support level on the daily chart.
• Market condition: Extreme fear.

Exit Logic

• Profit target: A 50% retracement of the panic move.
• Scaling out: Sell 50% at 2R, move stop to breakeven.
• Trailing stop: Use a 20-period EMA on the 15-minute chart.
• Signal failure: Exit if the price makes a new low.
• Opposite signal: Not applicable.
• Time expiration: Exit if the trade is not profitable within 3 days.
• Momentum loss: Not applicable.

Stop Loss Structure

• Hard stop: Below the low of the panic move.
• Soft stop: None.
• Max dollar loss: $1000 per trade.
• Max percent loss: 2% of account.
• Structural stop: Below a major support level.

Risk Management Framework

• Risk per trade: 1% of account.
• Daily limit: Not applicable (swing trade).
• Weekly limit: Not applicable (swing trade).
• Max drawdown: 20%.
• R:R requirement: Minimum 3:1.

Position Sizing Model

• Sizing approach: Fixed fractional.
• Volatility adjustment: Reduce size due to high volatility.
• Conviction sizing: All setups are treated equally.
• Scaling in: Not recommended.
• Scaling out: At 2R and 3R profit targets.

Trade Filtering

• Market conditions: Only trade during market-wide panics.
• Setups: Look for capitulation volume.
• Instruments: Index ETFs and large-cap stocks.
• Time restrictions: Not applicable.
• Chop/news avoidance: This strategy is triggered by news.

Context Framework

• Trend direction: Counter-trend.
• VWAP relationship: Not applicable.
• MA relationship: Price is far below the 200-day moving average.
• Range location: At the lows of a multi-year range.
• Higher TF alignment: Weekly and monthly charts show oversold conditions.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale out: At 2R and 3R.
• Add size: Not recommended.
• Fast vs slow moves: Expect a fast rebound.

Time Rules

• Optimal window: Not applicable.
• Times to avoid: Not applicable.
• Session notes: This is a rare event.

Setup Classification

• A+ setup: VIX > 40, capitulation volume, reversal candle at major support.
• A setup: VIX > 30, high volume, reversal candle.
• B setup: VIX > 25, no clear reversal.
• C setup: Avoid.

Market Selection Criteria

• Instruments: SPY, QQQ, DIA.
• Volume: Extremely high.
• Volatility: Extremely high.

Statistical Edge Metrics

• Win rate: 20-30%.
• Avg win: 5R.
• Avg loss: 1R.
• Profit factor: 1.0 - 1.5.
• Expectancy: Positive.

Failure Conditions

• Strategy fails if the panic selling continues.
• This is a high-risk strategy.

Psychological Rules

• Requires the ability to act decisively in a chaotic environment.
• Must be able to handle large drawdowns.

Advanced Components

• Regime detection: Use the VIX to identify panic.
• Filters: None.
• Correlation: The entire market will be correlated.
• MTF alignment: Look for confirmation on multiple timeframes.

Location

• Strongest: During black swan events.
• Weakest: During normal market conditions.