Failed Breakout Scalp Reversal

Entry Logic

• Exact entry trigger: The price breaks out of a recent trading range, but then quickly reverses and closes back inside the range.
• Confirmation requirements: The reversal occurs on high volume.
• Timeframe required: 5-minute chart.
• Location context: N/A.
• Market condition requirement: A choppy or range-bound market.

Exit Logic

• Profit target(s): The other side of the trading range.
• Scaling out rules: No scaling out.
• Trailing stop rules: No trailing stop.
• Exit on signal failure: If the price does not move towards the other side of the range, exit the trade.
• Exit on opposite signal: If the price breaks out of the range again, exit the trade.
• Exit on time expiration: Exit the trade after 30 minutes, regardless of the outcome.
• Exit on momentum loss: If the volume dries up, exit the trade.

Stop Loss Structure

• Hard stop location: 10 cents above the high of the failed breakout (for short trades) or 10 cents below the low of the failed breakout (for long trades).
• Soft stop rules: None.
• Maximum dollar loss per trade: $100.
• Maximum percent loss per trade: 1% of the account.
• Structural stop placement: Above the high of the failed breakout.

Risk Management Framework

• Risk per trade: 0.5% of the account.
• Maximum daily loss limit: 2 consecutive losing trades.
• Maximum weekly loss limit: 3% of the account.
• Maximum drawdown allowed: 5% of the account.
• Risk-reward ratio requirement: 2:1.

Position Sizing Model

• Recommended sizing approach: Fixed share size.
• Volatility-based adjustment: N/A.
• Conviction-based sizing (A+/A/B setup): N/A.
• Scaling in rules: No scaling in.
• Scaling out rules: No scaling out.

Trade Filtering

• Market conditions to avoid: A strong trending market.
• Specific setups required: A clear failed breakout.
• Stock/instrument requirements: Any stock.
• Time of day restrictions: N/A.
• Chop/news avoidance rules: Avoid trading around major news events.

Context Framework

• Trend direction assessment: N/A.
• VWAP relationship: N/A.
• Moving average relationship: N/A.
• Range location: N/A.
• Higher timeframe alignment: N/A.

Trade Management Rules

• When to move stop to breakeven: After the price has moved 50% of the way to the profit target.
• 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 at pre-defined targets. In slow moves, be patient and let the trade work.

Time Rules

• Optimal trading window: N/A.
• Times to avoid: N/A.
• Session-specific notes: This strategy can be used at any time of the day.

Setup Classification

• A+ setup criteria: All entry criteria are met.
• A setup criteria: N/A.
• B setup criteria: N/A.
• C setup criteria: The reversal is on low volume.

Market Selection Criteria

• Instrument requirements: Any stock.
• Volume/liquidity requirements: The stock must have sufficient liquidity to enter and exit the trade easily.
• Volatility requirements: N/A.

Statistical Edge Metrics

• Expected win rate: 65%.
• Average win size: $0.40.
• Average loss size: $0.20.
• Profit factor: 1.3.
• Expectancy per trade: $0.10.

Failure Conditions

• Market conditions where strategy fails: A strong trending market.
• Specific scenarios to avoid: Shorting a failed breakout in a strong uptrend.

Psychological Rules

• Key mental discipline requirements: The ability to trade against the crowd.

Advanced Components

• Market regime detection: N/A.
• Volatility/liquidity filters: N/A.
• Correlation filters: N/A.
• Multi-timeframe alignment: N/A.

Location

• Where this setup is strongest: In choppy or range-bound markets.
• Where this setup is weakest: In strong trending markets.
• Location changes outcome: N/A.