20 EMA Bounce in Trend

Entry Logic

• Entry trigger: Price pulls back to the 20 EMA in an established trend.
• Confirmation: A bullish pin bar or engulfing candle forms at the 20 EMA.
• Timeframe: 15-minute or 30-minute chart.
• Location context: Price is above the 50 SMA and the trend is clear.
• Market condition: Trending market.

Exit Logic

• Profit target: The previous high in an uptrend, or the previous low in a downtrend.
• Scaling out: Take 50% off at the first target, let the rest run.
• Trailing stop: Trail the stop below the 20 EMA.
• Signal failure: Exit if price closes on the wrong side of the 20 EMA.
• Opposite signal: Exit on a confirmed break of the trend.
• Time expiration: None.
• Momentum loss: Exit if momentum starts to wane.

Stop Loss Structure

• Hard stop: 1 ATR below the entry candle's low (for longs) or above the high (for shorts).
• Soft stop: A close on the wrong side of the 20 EMA.
• Max dollar loss: $120 per trade.
• Max percent loss: 1.2% of account.
• Structural stop: Below the most recent swing low (for longs) or above the swing high (for shorts).

Risk Management Framework

• Risk per trade: 0.8% of account.
• Daily limit: 3 losing trades.
• Weekly limit: 6% drawdown.
• Max drawdown: 18%.
• R:R requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional (0.8% of account).
• Volatility adjustment: Adjust size based on ATR.
• Conviction sizing: A+ setups get 1.2% risk.
• Scaling in: Not recommended.
• Scaling out: At the first profit target.

Trade Filtering

• Market conditions: Avoid non-trending markets.
• Setups: Only take bounces in a clear, established trend.
• Instruments: Any liquid instrument.
• Time restrictions: None.
• Chop/news avoidance: Avoid trading during major news releases.

Context Framework

• Trend direction: The primary trend must be clearly established.
• VWAP relationship: Trade in the direction of VWAP.
• MA relationship: The 20 EMA should be respected as dynamic support or resistance.
• Range location: The trade should be taken in the direction of the overall range expansion.
• Higher TF alignment: The higher timeframe chart should confirm the trend direction.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale out: At the first profit target.
• Add size: Not recommended.
• Fast vs slow moves: Let the trade run in a strong trend.

Time Rules

• Optimal window: Any time during a strong trend.
• Times to avoid: Choppy, non-trending periods.
• Session notes: Works well in all sessions.

Setup Classification

• A+ setup: A perfect bounce off the 20 EMA with a strong confirmation candle.
• A setup: A decent bounce with a good confirmation candle.
• B setup: A bounce with a weak confirmation candle.
• C setup: Avoid.

Market Selection Criteria

• Instruments: Any liquid instrument.
• Volume: High.
• Volatility: Moderate.

Statistical Edge Metrics

• Win rate: 60%.
• Avg win: 1.5R.
• Avg loss: 1R.
• Profit factor: 1.4.
• Expectancy: 0.4R.

Failure Conditions

• The strategy fails when the trend ends or the market becomes choppy.
• Avoid taking bounces if the 20 EMA is flat.

Psychological Rules

• Trust the trend and the 20 EMA.
• Do not get shaken out by minor pullbacks.

Advanced Components

• Regime detection: Use the ADX to confirm the trend strength.
• Filters: Only take trades if the ADX is above 20.
• Correlation: Be aware of market correlations.
• MTF alignment: Check the higher timeframe trend.

Location

• Strongest: In a strong, established trend.
• Weakest: In a choppy, non-trending market.