Institutional Distribution Detection

Entry Logic

• Entry is a short position when institutional distribution is detected through a series of large sell orders at a specific price level.
• Confirmation is the price starting to move down from the distribution zone.
• Timeframe is the 30-minute chart.
• Location is at a key resistance level or in a consolidation zone.
• Market is in a range or starting a new downtrend.

Exit Logic

• Profit target is a measured move from the distribution zone.
• Do not scale out.
• Trail the stop loss above the high of the last 3 bars.
• Exit if large buy orders appear.
• Exit on a bullish reversal pattern.
• Exit if the price does not move down within a few days.
• Exit if the distribution zone is broken to the upside.

Stop Loss Structure

• Hard stop is placed above the distribution zone.
• Soft stop is a close above the distribution zone.
• Maximum dollar loss is $500 per trade.
• Maximum percent loss is 5% of the account.
• Structural stop is above the distribution zone.

Risk Management Framework

• Risk 2.5% of the account per trade.
• Daily loss limit is 7.5% of the account.
• Weekly loss limit is 15% of the account.
• Maximum drawdown is 30%.
• Risk-reward ratio must be at least 1:3.

Position Sizing Model

• Use a fixed fractional position sizing model.
• No volatility adjustment.
• Full size for all setups.
• Do not scale in or out.

Trade Filtering

• Avoid trading in strong uptrends.
• Only trade when there is clear evidence of distribution.
• Trade only large-cap stocks.
• Avoid trading during earnings season.
• Do not trade in illiquid stocks.

Context Framework

• Trend is sideways or starting to turn down.
• Price is consolidating near the highs.
• Price is above the 200-day moving average.
• Location is in a consolidation zone.
• The higher timeframe chart (daily) shows a potential topping pattern.

Trade Management Rules

• Move stop to breakeven when the price reaches a 1:1 risk-reward ratio.
• Do not scale out.
• Do not add to the position.
• Be patient and let the trade develop over several days or weeks.

Time Rules

• Optimal trading window is during the last hour of the day.
• Avoid trading in the morning.
• The strategy requires a longer-term perspective.

Setup Classification

• A+ setup: Clear distribution in a well-known stock at a historical resistance level.
• A setup: Distribution in a mid-cap stock.
• B setup: Distribution in a small-cap stock.
• C setup: No clear distribution.

Market Selection Criteria

• Trade large-cap stocks like AAPL, MSFT, and GOOG.
• High liquidity is essential.
• Low volatility is preferred during the distribution phase.

Statistical Edge Metrics

• Expected win rate is 70%.
• Average win is 5R.
• Average loss is 1R.
• Profit factor is 3.5.
• Expectancy per trade is 3.5R.

Failure Conditions

• The strategy fails if the distribution is a false signal.
• Avoid trading when the overall market is in a strong uptrend.

Psychological Rules

• Be patient and have a long-term mindset.
• Do not be shaken out by short-term fluctuations.

Advanced Components

• Use a volume analysis tool to detect the distribution.
• Use a filter to identify stocks with institutional ownership.
• Do not trade correlated stocks in the same sector.
• The daily chart should confirm the topping pattern.

Location

• Strongest at historical resistance levels.
• Weakest in the middle of a trading range.
• The location of the distribution is a key factor.