Market Profile Poor High/Low Trade

Entry Logic

• Entry is a short position when the price takes out a poor high (a high with low volume) and then reverses.
• Confirmation is a bearish engulfing candle.
• Timeframe is the 30-minute chart.
• Location is at a poor high.
• Market is in a downtrend.

Exit Logic

• Profit target is the nearest support level.
• Scale out 50% at a 1:1 risk-reward ratio.
• Trail the stop loss above the high of each previous bar.
• Exit if the price closes above the poor high.
• Exit on a bullish reversal pattern.
• Exit if the price does not move down within 3 bars.
• Exit if selling momentum stalls.

Stop Loss Structure

• Hard stop is placed above the high of the entry candle.
• Soft stop is a close above the poor high.
• Maximum dollar loss is $250 per trade.
• Maximum percent loss is 2.5% of the account.
• Structural stop is above the poor high.

Risk Management Framework

• Risk 2% of the account per trade.
• Daily loss limit is 6% of the account.
• Weekly loss limit is 12% of the account.
• Maximum drawdown is 30%.
• Risk-reward ratio must be at least 1:1.5.

Position Sizing Model

• Use a fixed fractional position sizing model.
• No volatility adjustment.
• Full size for all setups.
• Do not scale in.
• Scale out as per the exit logic.

Trade Filtering

• Avoid trading in uptrends.
• Only trade when there is a clear poor high.
• Trade only major stock indices.
• Avoid trading during news events.
• Do not trade in choppy markets.

Context Framework

• Trend is down.
• Price is below VWAP.
• Price is below the 50 EMA.
• Location is at a poor high.
• The higher timeframe chart (daily) shows a clear downtrend.

Trade Management Rules

• Move stop to breakeven after the first profit target is hit.
• Scale out at the next support level.
• Do not add to the position.
• Let the trade run if selling momentum is strong.

Time Rules

• Optimal trading window is from 10:00 AM to 2:00 PM EST.
• Avoid trading in the last hour of the session.
• The strategy works best on trending days.

Setup Classification

• A+ setup: Rejection from a major poor high in a strong downtrend.
• A setup: Rejection from a minor poor high in a moderate downtrend.
• B setup: Rejection with low volume.
• C setup: No clear poor high.

Market Selection Criteria

• Trade SPY, QQQ, and IWM.
• High volume is required.
• Moderate volatility is preferred.

Statistical Edge Metrics

• Expected win rate is 65%.
• Average win is 1.8R.
• Average loss is 1R.
• Profit factor is 1.17.
• Expectancy per trade is 0.17R.

Failure Conditions

• The strategy fails if the poor high is taken out with strong volume.
• Avoid trading when there is a strong bullish sentiment in the market.

Psychological Rules

• Be patient and wait for the price to test the poor high.
• Do not be afraid to short a new high.

Advanced Components

• Use a market profile to identify the poor high.
• Use a trend filter to confirm the downtrend.
• Do not trade correlated indices in the same direction.
• The daily chart must confirm the downtrend.

Location

• Strongest in a clear downtrend.
• Weakest in an uptrend or a range-bound market.
• The location of the poor high within the trend is important.