Stochastic Pop Trade

Entry Logic

• Exact Entry Trigger: Enter long when the stochastic indicator moves above the 80 level. Enter short when it moves below the 20 level.
• Confirmation: Strong momentum candle in the direction of the trade.
• Timeframe: 5-minute.
• Market Condition: Strong trending.

Exit Logic

• Profit Targets: Exit when the stochastic indicator crosses back below 80 for longs, or above 20 for shorts.
• Time Expiration: Exit after 3-5 candles.

Stop Loss Structure

• Hard Stop: Place stop at the midpoint of the entry candle.

Risk Management Framework

• Risk Per Trade: 0.5% of account capital.
• R:R Requirement: Minimum 1:1.

Position Sizing Model

• Sizing Approach: Fixed dollar amount.

Trade Filtering

• Market Conditions to Avoid: Ranging markets.

Context Framework

• Trend Direction: Only trade in the direction of the 15-minute and 60-minute trend.

Trade Management Rules

• Fast Moves: This is a scalping strategy; take profits quickly.

Time Rules

• Optimal Window: First hour of the trading session.

Setup Classification

• A+ Setup: The pop occurs on a breakout from a consolidation pattern.

Market Selection Criteria

• Instruments: High-beta, volatile stocks.

Statistical Edge Metrics

• Win Rate: 70-80%.
• Profit Factor: 1.2.
• Expectancy: 0.1R.

Failure Conditions

• Strategy Fails: In slow, choppy markets.

Psychological Rules

• Discipline: Execute quickly and without hesitation.

Advanced Components

• Filters: Only trade stocks with a daily ATR greater than 3%.

Location

• Strongest: During periods of high market volatility.