Circuit Breaker Recovery Trade

Entry Logic

• Exact Entry Trigger: A stock halts for a circuit breaker (LULD - Limit Up/Limit Down) and then resumes trading.
• Confirmation: On resumption, the stock holds above the halt price and shows strong buying volume.
• Timeframe: 1-minute chart.
• Location Context: The halt was triggered by a rapid upward price move (Limit Up).
• Market Condition: Volatile, high-momentum market.

Exit Logic

• Profit Target(s): A 5-10% scalp, as volatility is extreme.
• Scaling Out: Sell the entire position at the target.
• Trailing Stop: A tight mental stop below the resumption price.
• Signal Failure: The stock immediately flushes below the halt price upon resumption.
• Opposite Signal: A second halt, but this time to the downside (Limit Down).
• Time Expiration: 5-10 minutes.
• Momentum Loss: The stock fails to make a new high within 2 minutes of resumption.

Stop Loss Structure

• Hard Stop: 3% below the entry price.
• Soft Stop: A break below the resumption price.
• Maximum Dollar Loss: $300 per trade.
• Maximum Percent Loss: 3% of the trade value.
• Structural Stop: The low of the 1-minute candle prior to the halt.

Risk Management Framework

• Risk Per Trade: 0.25% of the account.
• Maximum Daily Loss: 1% of the account.
• Maximum Weekly Loss: 3% of the account.
• Maximum Drawdown: 10% of the account.
• R:R Requirement: Minimum 2:1.

Position Sizing Model

• Sizing Approach: Very small size due to extreme risk.
• Volatility Adjustment: Risk is managed entirely by position size.
• Conviction Sizing: Not applicable.
• Scaling In: Absolutely not recommended.
• Scaling Out: Exit the entire position at once.

Trade Filtering

• Market Conditions to Avoid: Slow, non-volatile markets.
• Specific Setups: Only trade Limit Up halts, not Limit Down.
• Instrument Requirements: High-momentum, in-play stocks.
• Time Restrictions: This is an intraday-only, short-duration trade.
• Chop/News Avoidance: The halt is often caused by news.

Context Framework

• Trend Direction: Strong intraday uptrend.
• VWAP Relationship: Well above VWAP.
• MA Relationship: Far above all short-term moving averages.
• Range Location: At new highs for the day.
• Higher TF Alignment: Not relevant for this scalp.

Trade Management Rules

• Breakeven: Not applicable; this is an all-or-nothing scalp.
• Scale Out: Not applicable.
• Add Size: Never.
• Fast vs Slow Moves: The entire trade is a fast move.

Time Rules

• Optimal Window: The first 2 hours of the trading day when momentum is highest.
• Times to Avoid: Low-volume periods.
• Session Notes: This is a morning momentum strategy.

Setup Classification

• A+ Criteria: A Limit Up halt in a hot stock that resumes with a surge in volume.
• A Criteria: A Limit Up halt that resumes and holds the halt price.
• B Criteria: A halt in a less volatile stock.
• C Criteria: Any Limit Down halt.

Market Selection Criteria

• Instruments: High-beta, volatile stocks.
• Volume/Liquidity: Must be liquid, but often these are lower-float names.
• Volatility: Extreme.

Statistical Edge Metrics

• Expected Win Rate: 40-50%.
• Average Win Size: 5-15%.
• Average Loss Size: 3-5%.
• Profit Factor: 2.0+.
• Expectancy: Positive if managed with extreme discipline.

Failure Conditions

• Market Conditions: The buying pressure was exhausted by the halt.
• Specific Scenarios: The halt was caused by a 'fat finger' or erroneous trade that gets corrected.

Psychological Rules

• Mental Discipline: Requires lightning-fast reflexes and zero hesitation on entry and exit. Do not freeze.

Advanced Components

• Market Regime Detection: A 'risk-on' day is better.
• Filters: Have a scanner that alerts to LULD halts in real-time.
• Correlation: Not a factor.
• MTF Alignment: Not applicable.

Location

• Where Strongest: In a stock that is already a high-momentum 'story' for the day.
• Where Weakest: In a random, unexplained halt.