Cross-Market Signal Trade

Entry Logic

• Long entry: A leading market (e.g., NQ) breaks out to a new high. Enter long on a lagging, correlated market (e.g., ES) as it follows.
• Short entry: A leading market breaks down to a new low. Enter short on a lagging, correlated market as it follows.
• Confirmation: The lagging market starts to move in the same direction as the leading market.
• Timeframe: 1-minute chart.
• Location: Near the open.
• Market Condition: Trending.

Exit Logic

• Profit Target: 2R.
• Scaling Out: Not recommended.
• Trailing Stop: Trail the stop on the 1-minute chart.
• Signal Failure: Exit if the lagging market fails to follow the leading market.
• Opposite Signal: Not applicable.
• Time Expiration: Exit within 30 minutes.
• Momentum Loss: Exit if momentum stalls.

Stop Loss Structure

• Hard Stop: A tight, 1-minute ATR-based stop.
• Soft Stop: If the leading market reverses.
• Max Dollar Loss: $100 per trade.
• Max Percent Loss: 0.5% of account.
• Structural Stop: Below the entry candle.

Risk Management Framework

• Risk Per Trade: 0.5% of account.
• Daily Limit: 4 losing trades.
• Weekly Limit: 5% drawdown.
• Max Drawdown: 10%.
• R:R Requirement: 2:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.
• Volatility Adjustment: The ATR-based stop adjusts for volatility.
• Conviction Sizing: Not recommended.
• Scaling In: Not recommended.
• Scaling Out: Not recommended.

Trade Filtering

• Market Conditions: Trending market.
• Setups: Clear leader/laggard relationship.
• Instruments: ES/NQ, DAX/STOXX.
• Time Restrictions: First hour of the session.
• Chop/News Avoidance: Avoid news.

Context Framework

• Trend Direction: Follow the leader.
• VWAP Relationship: Not primary.
• MA Relationship: Not primary.
• Range Location: Breakout.
• Higher TF Alignment: Not required.

Trade Management Rules

• Breakeven: Move to breakeven at 1R.
• Scale Out: Not recommended.
• Add Size: Not recommended.
• Fast vs Slow Moves: This is a fast-moving strategy.

Time Rules

• Optimal Window: 9:30-10:30 AM EST.
• Times to Avoid: Mid-day.
• Session Notes: Morning momentum is key.

Setup Classification

• A+ Setup: NQ screams higher, ES is slow to follow. Enter ES long.
• A Setup: Good leader/laggard action.
• B Setup: Unclear relationship.
• C Setup: Markets are moving in lockstep.

Market Selection Criteria

• Instruments: Highly correlated index futures.
• Volume: High.
• Volatility: High.

Statistical Edge Metrics

• Win Rate: 50%.
• Avg Win: 2R.
• Avg Loss: 1R.
• Profit Factor: 1.0.
• Expectancy: 0.

Failure Conditions

• Market Conditions: Fails in chop.
• Specific Scenarios: The laggard never catches up.

Psychological Rules

• Mental Discipline: Must be fast and decisive.

Advanced Components

• Regime Detection: Not needed.
• Filters: Not needed.
• Correlation: The basis of the strategy.
• MTF Alignment: Not needed.

Location

• Strongest: At the open.
• Weakest: In quiet markets.