EMA Scalp (5 EMA on 1-Min)

Entry Logic

• Exact entry trigger: Price pulls back to the 5 EMA on the 1-minute chart and holds.
• Confirmation requirements: A bullish or bearish candlestick pattern forms at the 5 EMA.
• Timeframe required: 1-minute chart.
• Location context: The price is in a strong uptrend or downtrend.
• Market condition requirement: Trending market.

Exit Logic

• Profit target(s): The previous high or low.
• Scaling out rules: No scaling out.
• Trailing stop rules: No trailing stop.
• Exit on signal failure: If the price closes below the 5 EMA (for long trades) or above the 5 EMA (for short trades), exit the trade.
• Exit on opposite signal: If a reversal candle appears, exit the trade.
• Exit on time expiration: Exit the trade after 10 minutes, regardless of the outcome.
• Exit on momentum loss: If the volume dries up, exit the trade.

Stop Loss Structure

• Hard stop location: 5 cents below the low of the entry candle (for long trades) or 5 cents above the high of the entry candle (for short trades).
• Soft stop rules: None.
• Maximum dollar loss per trade: $50.
• Maximum percent loss per trade: 0.5% of the account.
• Structural stop placement: Below the low of the entry candle.

Risk Management Framework

• Risk per trade: 0.25% of the account.
• Maximum daily loss limit: 3 consecutive losing trades.
• Maximum weekly loss limit: 5% of the account.
• Maximum drawdown allowed: 10% of the account.
• Risk-reward ratio requirement: 2:1.

Position Sizing Model

• Recommended sizing approach: Fixed share size.
• Volatility-based adjustment: Reduce share size by 50% if the VIX is above 30.
• Conviction-based sizing (A+/A/B setup): A+ setups get 100% size, A setups get 75%, B setups get 50%.
• Scaling in rules: No scaling in.
• Scaling out rules: No scaling out.

Trade Filtering

• Market conditions to avoid: Ranging markets.
• Specific setups required: A clear pullback to the 5 EMA.
• Stock/instrument requirements: High-volume stocks with tight spreads.
• Time of day restrictions: Avoid trading during the first 15 minutes of the market open.
• Chop/news avoidance rules: Avoid trading around major news events.

Context Framework

• Trend direction assessment: Trade in the direction of the 5-minute trend.
• VWAP relationship: Enter long trades above VWAP, short trades below VWAP.
• Moving average relationship: The 9 EMA should be above the 20 EMA for long trades, and below the 20 EMA for short trades.
• Range location: N/A.
• Higher timeframe alignment: The 15-minute chart should be in an uptrend for long trades, and a downtrend for short trades.

Trade Management Rules

• When to move stop to breakeven: After the price has moved 10 cents in your favor.
• When to scale out: No scaling out.
• When to add size: No adding size.
• How to handle fast moves vs slow moves: In fast moves, take profits quickly. In slow moves, be patient and let the trade work.

Time Rules

• Optimal trading window: 9:45 AM - 11:00 AM EST.
• Times to avoid: 12:00 PM - 1:00 PM EST.
• Session-specific notes: The strategy works best during the morning session.

Setup Classification

• A+ setup criteria: All entry criteria are met, and the higher timeframe charts are aligned.
• A setup criteria: All entry criteria are met, but the higher timeframe charts are not aligned.
• B setup criteria: Only some of the entry criteria are met.
• C setup criteria: None of the entry criteria are met.

Market Selection Criteria

• Instrument requirements: Stocks with a daily volume of over 5 million shares.
• Volume/liquidity requirements: The stock must have a tight bid-ask spread.
• Volatility requirements: The stock must have a daily range of at least $1.

Statistical Edge Metrics

• Expected win rate: 60%.
• Average win size: $0.15.
• Average loss size: $0.05.
• Profit factor: 1.8.
• Expectancy per trade: $0.04.

Failure Conditions

• Market conditions where strategy fails: Ranging markets.
• Specific scenarios to avoid: Trading against the trend.

Psychological Rules

• Key mental discipline requirements: Patience, discipline, and the ability to act quickly.

Advanced Components

• Market regime detection: Use the VIX to determine the market regime.
• Volatility/liquidity filters: Only trade stocks with high volume and volatility.
• Correlation filters: Avoid trading stocks that are highly correlated with each other.
• Multi-timeframe alignment: The 5-minute, 15-minute, and 60-minute charts should all be aligned.

Location

• Where this setup is strongest: In strong trending markets.
• Where this setup is weakest: In ranging markets.
• Location changes outcome: Trading against the trend will likely result in a loss.