Order Flow Exhaustion

Entry Logic

• Entry is a long position when selling pressure is exhausted at a key support level, indicated by a sharp decrease in selling volume and a tick up in price.
• Confirmation is a bullish candle on the 1-minute chart.
• Timeframe is the tick chart and 1-minute chart.
• Location is at a major support level.
• Market is in a range or an uptrend.

Exit Logic

• Profit target is the next resistance level.
• Scale out 50% at a 2:1 risk-reward ratio.
• Trail the stop loss below the low of the last 5 bars.
• Exit if selling pressure resumes.
• Exit on a bearish engulfing candle.
• Exit if the price does not move up within 10 minutes.
• Exit if buying momentum stalls.

Stop Loss Structure

• Hard stop is placed 10 ticks below the entry price.
• Soft stop is a close below the support level.
• Maximum dollar loss is $100 per trade.
• Maximum percent loss is 1% of the account.
• Structural stop is below the support level.

Risk Management Framework

• Risk 0.5% of the account per trade.
• Daily loss limit is 2% of the account.
• Weekly loss limit is 5% of the account.
• Maximum drawdown is 15%.
• Risk-reward ratio must be at least 1:2.

Position Sizing Model

• Use a fixed fractional position sizing model.
• Reduce size by 50% in low volatility.
• Full size for A+ setups, half size for A setups.
• Do not scale in.
• Scale out as per the exit logic.

Trade Filtering

• Avoid trading in strong downtrends.
• Only trade at major support levels.
• Trade only highly liquid instruments.
• Avoid trading during news events.
• Do not trade in choppy markets.

Context Framework

• Trend is sideways or up.
• Price is near or above VWAP.
• Price is above the 50 EMA.
• Location is at a major support level.
• The higher timeframe chart (30-minute) shows a consolidation or uptrend.

Trade Management Rules

• Move stop to breakeven after the first profit target is hit.
• Scale out at resistance levels.
• Do not add to the position.
• Let the trade run if buying momentum is strong.

Time Rules

• Optimal trading window is from 10:00 AM to 12:00 PM EST.
• Avoid trading in the afternoon.
• The strategy works best when the market is testing a key level.

Setup Classification

• A+ setup: Clear exhaustion at a major support level with strong buying coming in.
• A setup: Exhaustion at a minor support level.
• B setup: Exhaustion with weak buying.
• C setup: No clear exhaustion.

Market Selection Criteria

• Trade ES, NQ, and ZB futures.
• High liquidity is essential.
• Moderate volatility is preferred.

Statistical Edge Metrics

• Expected win rate is 60%.
• Average win is 2.5R.
• Average loss is 1R.
• Profit factor is 1.5.
• Expectancy per trade is 0.5R.

Failure Conditions

• The strategy fails if the support level breaks.
• Avoid trading when there is a strong bearish sentiment in the market.

Psychological Rules

• Be patient and wait for the exhaustion to be confirmed.
• Do not be afraid to buy at a new low if the exhaustion is clear.

Advanced Components

• Use a footprint chart to visualize the exhaustion.
• Use a volume filter to confirm the decrease in selling pressure.
• Do not trade correlated instruments at the same time.
• The 30-minute chart should confirm the support level.

Location

• Strongest at major support levels.
• Weakest at minor support levels.
• The location of the exhaustion is critical for the success of the trade.