Shark Pattern Trade

Entry Logic

• Exact Entry Trigger: The Shark pattern is a five-point reversal pattern. Enter at the completion of the D leg, which is at the 88.6% or 113% retracement of the OX leg.
• Confirmation: A reversal candle at the D point.
• Timeframe: Any.
• Location Context: At a potential reversal point.
• Market Condition: Reversing.

Exit Logic

• Profit Targets: The 38.2% and 61.8% retracements of the CD move.
• Scaling Out: 50% at the 38.2% retracement.
• Trailing Stop: Bar-by-bar trail.
• Signal Failure Exit: If price moves beyond the D point.
• Opposite Signal Exit: Not applicable.
• Time Expiration: None.
• Momentum Loss: Exit on fading momentum.

Stop Loss Structure

• Hard Stop: Just beyond the D point.
• Soft Stop: A close beyond the D point.
• Maximum Dollar Loss: 0.5% of account.
• Maximum Percent Loss: 0.5%.
• Structural Stop: Beyond the D point.

Risk Management Framework

• Risk Per Trade: 0.5%.
• Maximum Daily Limit: 2%.
• Maximum Weekly Limit: 5%.
• Maximum Drawdown: 15%.
• R:R Requirement: Minimum 2:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.
• Volatility Adjustment: None.
• Conviction Sizing: Based on the clarity of the pattern.
• Scaling In: No.
• Scaling Out: At the 38.2% retracement.

Trade Filtering

• Market Conditions to Avoid: Strong trending markets.
• Specific Setups Required: A clear Shark pattern.
• Instruments: Any.
• Time Restrictions: None.
• Chop/News Avoidance: Be cautious around news.

Context Framework

• Trend Direction: Reversing.
• VWAP Relationship: Not primary.
• Moving Average Relationship: Not primary.
• Range Location: Not applicable.
• Higher TF Alignment: A higher timeframe Shark is a very strong signal.

Trade Management Rules

• Breakeven: At the 38.2% retracement.
• Scale Out: At the 38.2% retracement.
• Add Size: No.
• Fast vs. Slow Moves: Expect a fast move.

Time Rules

• Optimal Trading Window: Any.
• Times to Avoid: Illiquid periods.
• Session Notes: None.

Setup Classification

• A+ Criteria: A clear Shark on a higher timeframe.
• A Criteria: A clear Shark on a 1-hour or 4-hour chart.
• B Criteria: A Shark on a lower timeframe.
• C Criteria: No clear Shark.

Market Selection Criteria

• Instruments: Any.
• Volume/Liquidity: Good.
• Volatility: Moderate.

Statistical Edge Metrics

• Win Rate: 40-45%.
• Avg Win: 3R.
• Avg Loss: 1R.
• Profit Factor: 1.2 - 1.35.
• Expectancy: 0.2R - 0.35R per trade.

Failure Conditions

• Market Conditions: The trend continues.
• Specific Scenarios: The pattern fails.

Psychological Rules

• Mental Discipline: Be able to identify the pattern correctly.

Advanced Components

• Regime Detection: None.
• Filters: None.
• Correlation: None.
• MTF Alignment: Essential.

Location

• Where Strongest: At major turning points.
• Where Weakest: In the middle of a trend.