Breakout with Volume Surge

Entry Logic

Enter long on the 1-minute candle close above a defined resistance level. Confirmation: Volume on the breakout candle must be at least 2x the average volume of the preceding 10 candles. Timeframe: 1-minute for entry, 5-minute for context. Location: Above a range high or trendline. Market condition: Initiating a new trend or continuing an existing one.

Exit Logic

Target 1: 1.5R. Scale out 50%. Target 2: 3R. Scale out remaining 50%. Trailing stop 1-minute 9 EMA. Exit if price closes below the 9 EMA after 1R profit. Exit if no significant movement within 10 minutes.

Stop Loss Structure

Place hard stop 0.5R below the breakout candle low. Max dollar loss $250. Max 0.75% portfolio loss. Structural stop below the consolidation pattern.

Risk Management Framework

Risk 0.75% of capital per trade. Max daily loss 3%. Max weekly loss 7%. Maintain 2:1 R:R minimum.

Position Sizing Model

Size to risk 0.75% of capital. Reduce size by 30% for B setups. Increase size by 20% for A+ setups. No scaling in.

Trade Filtering

Trade only stocks above $10. Avoid stocks with pending news. Avoid low volume hours. Trade during high liquidity.

Context Framework

Daily chart must show bullish bias. Price must be above 20 VWAP. Breakout should occur from a clear consolidation. Higher timeframe (30-minute) should show room to run.

Trade Management Rules

Move stop to breakeven after 1R. Scale out 50% at 1.5R. Look for continuation patterns at higher prices. Manage fast moves with tight trailing stops; allow more room for slower moves.

Time Rules

Optimal window: 9:30 AM - 10:30 AM EST. Avoid 12:00 PM - 1:30 PM EST. Session notes: Early market often provides explosive breakouts.

Setup Classification

A+: Clear consolidation, massive volume surge on breakout, daily trend alignment. A: Good consolidation, strong volume, good daily trend. B: Minor consolidation, average volume, less clear daily trend.

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 50-55%. Avg win 1.7R. Avg loss 0.8R. Profit factor > 1.3. Expectancy $150 per $100 risked.

Failure Conditions

Volume surge is not sustained. Price immediately reverses after breakout. Market condition shifts.

Psychological Rules

Trust the volume confirmation. Do not fade the breakout. Accept small losses. Avoid FOMO.

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.