First Pullback After Breakout

Entry Logic

Enter long on the first 1-minute candle close above the 5-period Exponential Moving Average (EMA) after the price pulls back to the breakout level or a significant moving average. Confirm with increased volume on the pullback candle. Enter on 1-minute chart. Breakout must occur from a defined consolidation pattern (e.g., flag, pennant, range). Market condition must be trending.

Exit Logic

Target 1: 1.5R. Scale out 50%. Target 2: 3R. Scale out remaining 50%. Trail stop with 1-minute 9 EMA if momentum sustains. Exit entire position if price closes below 9 EMA after scaling out. Exit if trade shows no progress within 15 minutes.

Stop Loss Structure

Place hard stop 0.5R below the breakout level or 0.25R below the pullback low. Max dollar loss $200 per trade. Max 0.5% portfolio loss per trade. Structural stop below the consolidation low.

Risk Management Framework

Risk 0.5% of capital per trade. Max daily loss 2%. Max weekly loss 5%. Maintain 2:1 R:R minimum for all trades.

Position Sizing Model

Size to risk 0.5% of capital. Reduce size by 25% for B setups. Increase size by 25% for A+ setups. No scaling in.

Trade Filtering

Only trade high-volume stocks ($5+). Avoid news events. Avoid chop zones (ATR < 0.5%). Trade during market open (9:30 AM - 11:00 AM EST).

Context Framework

Trade only in direction of daily trend. Price must be above 20 VWAP. Price must be above 50 SMA on 5-minute chart. Pullback should hold 20 EMA on 1-minute chart. Higher timeframe (15-minute) must show bullish structure.

Trade Management Rules

Move stop to breakeven after 1R profit. Scale out 50% at 1.5R. Re-evaluate if price consolidates at 2R. Manage fast moves aggressively; slow moves allow more room.

Time Rules

Optimal window: 9:30 AM - 10:30 AM EST. Avoid 12:00 PM - 1:00 PM EST. Session notes: Post-opening volatility offers best opportunities.

Setup Classification

A+: Strong daily trend, high volume breakout, shallow pullback to key level. A: Clear daily trend, good volume, pullback to 20 EMA. B: Moderate daily trend, average volume, deeper pullback.

Market Selection Criteria

Stocks with average daily volume > 5 million shares. Volatility (ATR) > 1.0%. Market cap > $1 billion.

Statistical Edge Metrics

Expected win rate 55-60%. Avg win 1.8R. Avg loss 0.7R. Profit factor > 1.5. Expectancy $200 per $100 risked.

Failure Conditions

Breakout fails to hold. Pullback breaches key support. Volume declines on breakout. Market reverses.

Psychological Rules

Adhere strictly to stop loss. Do not chase trades. Accept small losses. Avoid revenge trading.

Advanced Components

Use 5-minute chart for multi-timeframe alignment. Confirm breakout on 1-minute and 5-minute. Scan for sector strength.

Location

Strongest in early market session. Weakest during lunch hour.