Long-Legged Doji Volatility Entry

Entry Logic

• Exact entry trigger: Place a buy-stop order above the high of the Doji and a sell-stop order below the low of the Doji.
• Confirmation requirements: A Doji with very long upper and lower wicks, indicating extreme indecision and volatility.
• Timeframe required: Any timeframe.
• Location context: Can occur anywhere, but is more significant at key support or resistance levels.
• Market condition requirement: A volatile market.

Exit Logic

• Profit target(s): A measured move target based on the height of the Doji.
• Scaling out rules: N/A.
• Trailing stop rules: Use a fast EMA.
• Exit on signal failure: If one order is triggered and the price then reverses to trigger the other order, exit immediately.
• Exit on opposite signal: A strong reversal pattern.
• Exit on time expiration: N/A.
• Exit on momentum loss: N/A.

Stop Loss Structure

• Hard stop location: If long, the stop is the low of the Doji. If short, the stop is the high of the Doji.
• Soft stop rules: N/A.
• Maximum dollar loss per trade: 1% of capital.
• Maximum percent loss per trade: N/A.
• Structural stop placement: On the other side of the Doji's range.

Risk Management Framework

• Risk per trade: 1%.
• Maximum daily loss limit: 2%.
• Maximum weekly loss limit: 5%.
• Maximum drawdown allowed: 15%.
• Risk-reward ratio requirement: 1:2.

Position Sizing Model

• Recommended sizing approach: Size based on the height of the Doji.
• Volatility-based adjustment: The wide range of the Doji often requires a smaller position size.
• Conviction-based sizing (A+/A/B setup): A+ for a Doji at a major weekly support/resistance. A for a Doji at a daily level. B for a Doji at an intraday level.
• Scaling in rules: N/A.
• Scaling out rules: N/A.

Trade Filtering

• Market conditions to avoid: Low-volatility markets.
• Specific setups required: A clear Long-Legged Doji.
• Stock/instrument requirements: Volatile instruments.
• Time of day restrictions: N/A.
• Chop/news avoidance rules: N/A.

Context Framework

• Trend direction assessment: The trade is taken in the direction of the breakout.
• VWAP relationship: N/A.
• Moving average relationship: N/A.
• Range location: Can occur anywhere.
• Higher timeframe alignment: N/A.

Trade Management Rules

• When to move stop to breakeven: After a 1R move.
• When to scale out: N/A.
• When to add size: N/A.
• How to handle fast moves vs slow moves: This is a volatility strategy, so fast moves are expected.

Time Rules

• Optimal trading window: N/A.
• Times to avoid: N/A.
• Session-specific notes: N/A.

Setup Classification

• A+ setup criteria: A very long-legged Doji at a major S/R level, with a high-volume breakout.
• A setup criteria: A Doji of average size at a minor S/R level.
• B setup criteria: A Doji with shorter legs.
• C setup criteria (avoid): A Doji in a quiet market.

Market Selection Criteria

• Instrument requirements: Volatile stocks, commodities, and forex pairs.
• Volume/liquidity requirements: High volume.
• Volatility requirements: High ATR.

Statistical Edge Metrics

• Expected win rate: 45-50%
• Average win size: 3R
• Average loss size: 1R
• Profit factor: 1.3 - 1.5
• Expectancy per trade: 0.35R.

Failure Conditions

• Market conditions where strategy fails: In low-volatility, trending markets.
• Specific scenarios to avoid: A series of multiple Dojis.

Psychological Rules

• Key mental discipline requirements: The ability to handle large price swings.

Advanced Components

• Market regime detection: N/A.
• Volatility/liquidity filters: N/A.
• Correlation filters: N/A.
• Multi-timeframe alignment: N/A.

Location

• Where this setup is strongest: At major S/R levels.
• Where this setup is weakest: In the middle of a range.
• Location changes outcome: Yes.