3. Multi-Day Range Breakout

Entry Logic

Price closes above a defined 3-5 day range high. Confirmation is a 1-minute candle close above the range high. Enter within the first hour of market open. Location is at the top of the multi-day range. Market shows strong upward momentum.

Exit Logic

Target 1: 1.5R. Target 2: 2.5R. Scale out 50% at Target 1. Trail remaining position with a 15-minute ATR stop. Close trade if price re-enters the multi-day range. Exit all positions by 3:45 PM EST. Close trade if momentum clearly fades.

Stop Loss Structure

Hard stop is 0.5R below entry. Max dollar loss is $250. Max percent loss is 1.25% of trading capital. Structural stop is below the breakout candle's low.

Risk Management Framework

Risk 1.25% of capital per trade. Daily loss limit is 3.5% of capital. Weekly loss limit is 7.0% of capital. Max drawdown is 12.0%. Require minimum 1.75:1 R:R.

Position Sizing Model

Size to risk 1.25% of capital. Volatility adjustment: reduce size by 10% for stocks with ATR > 3%. High conviction trades increase size by 25%. Scale in on pullbacks to the range high.

Trade Filtering

Only trade stocks with average daily volume over 10 million shares. Avoid major economic announcements. Avoid choppy consolidation within the range. Setup requires a clear, defined range.

Context Framework

Overall market trend is up. Price is above VWAP. Price is above 50-period moving average. Breakout occurs from a well-established multi-day range. Higher timeframe shows accumulation.

Trade Management Rules

Move stop to breakeven after 1R profit. Scale out at profit targets. Do not add to losing positions. Be patient with slower moves, aggressive with fast moves.

Time Rules

Optimal entry window is 9:30 AM to 10:30 AM EST. Avoid entries after 12:00 PM EST. Close all positions by 3:45 PM EST.

Setup Classification

A+ setup: Strong volume on breakout, clean range, high relative strength. A setup: Moderate volume, clear range. B setup: Lower volume, less defined range. C setup: Avoid.

Market Selection Criteria

Trade NASDAQ, NYSE, AMEX listed stocks. Minimum average daily volume 10 million. Minimum price $20. Volatility between 3% and 8% daily range.

Statistical Edge Metrics

Expected win rate 58%. Average win 2.0R. Average loss 0.9R. Profit factor 1.3. Expectancy $0.08 per dollar risked.

Failure Conditions

Breakout candle lacks conviction. Price quickly re-enters the range. Overall market sentiment shifts negatively. Range is too wide or too narrow.

Psychological Rules

Trust the range. Do not anticipate breakouts. Wait for confirmation. Avoid revenge trading. Stay objective.

Advanced Components

Regime detection confirms low volatility expansion. Filter for stocks with increasing institutional ownership. Sector correlation is positive. Multi-timeframe alignment shows range compression before expansion.

Location

Strongest when the range high aligns with a prior swing high on a higher timeframe. Weakest when the range is within a larger, undefined consolidation.