2. Prior Day Low Breakdown

Entry Logic

Price closes below prior day's low. Confirmation is a 1-minute candle close below prior day's low. Enter within the first 30 minutes of market open. Location is near prior day's low. Market shows strong downward momentum.

Exit Logic

Target 1: 1.5R. Target 2: 2.5R. Scale out 50% at Target 1. Trail remaining position with a 5-minute ATR stop. Close trade if price re-crosses prior day's low from below. Exit all positions by 3:45 PM EST. Close trade if momentum clearly fades.

Stop Loss Structure

Hard stop is 0.5R above entry. Max dollar loss is $200. Max percent loss is 1.0% of trading capital. Structural stop is above the breakdown candle's high.

Risk Management Framework

Risk 1.0% of capital per trade. Daily loss limit is 3.0% of capital. Weekly loss limit is 6.0% of capital. Max drawdown is 10.0%. Require minimum 1.5:1 R:R.

Position Sizing Model

Size to risk 1.0% of capital. No volatility adjustment. High conviction trades increase size by 20%. Scale in on rallies to VWAP.

Trade Filtering

Only trade stocks with average daily volume over 5 million shares. Avoid news events. Avoid choppy markets. Setup requires clean price action.

Context Framework

Overall market trend is down. Price is below VWAP. Price is below 20-period moving average. Breakdown occurs from a tight range near prior day's low. Higher timeframe shows bearish structure.

Trade Management Rules

Move stop to breakeven after 1R profit. Scale out at profit targets. Do not add to losing positions. Adjust stops quickly on fast moves.

Time Rules

Optimal entry window is 9:30 AM to 10:00 AM EST. Avoid entries after 11:00 AM EST. Close all positions by 3:45 PM EST.

Setup Classification

A+ setup: Strong volume on breakdown, clear trend. A setup: Moderate volume, clear trend. B setup: Lower volume, choppier trend. C setup: Avoid.

Market Selection Criteria

Trade NASDAQ and NYSE listed stocks. Minimum average daily volume 5 million. Minimum price $10. Volatility greater than 2% daily range.

Statistical Edge Metrics

Expected win rate 55%. Average win 1.8R. Average loss 0.8R. Profit factor 1.2. Expectancy $0.05 per dollar risked.

Failure Conditions

Breakdown candle lacks volume. Price immediately retests prior day's low and fails. Overall market turns bullish. News event impacts stock.

Psychological Rules

Follow the plan. Do not chase trades. Accept losses. Do not overtrade. Maintain discipline.

Advanced Components

Regime detection confirms bearish market. Filter for stocks with low relative strength. Correlation with sector is negative. Multi-timeframe alignment shows bearish bias.

Location

Strongest when prior day's low is near a significant support level. Weakest when prior day's low is in open air with no clear structure below.