200 SMA Institutional Support

Entry Logic

• Entry trigger: Price approaches the 200 SMA from above.
• Confirmation: Price bounces off the 200 SMA with a strong bullish candle.
• Timeframe: Daily chart.
• Location context: The 200 SMA is acting as a major support level.
• Market condition: A long-term uptrend.

Exit Logic

• Profit target: The previous swing high.
• Scaling out: Not recommended.
• Trailing stop: Trail the stop below the 200 SMA.
• Signal failure: Exit if price closes below the 200 SMA.
• Opposite signal: Exit on a confirmed break of the uptrend.
• Time expiration: None.
• Momentum loss: Exit if momentum fades.

Stop Loss Structure

• Hard stop: 2 ATR below the 200 SMA.
• Soft stop: A close below the 200 SMA.
• Max dollar loss: $500 per trade.
• Max percent loss: 2.5% of account.
• Structural stop: Below the most recent major swing low.

Risk Management Framework

• Risk per trade: 2% of account.
• Daily limit: 1 losing trade.
• Weekly limit: 4% drawdown.
• Max drawdown: 10%.
• R:R requirement: Minimum 3:1.

Position Sizing Model

• Sizing approach: Fixed fractional (2% of account).
• Volatility adjustment: Adjust size based on ATR.
• Conviction sizing: None.
• Scaling in: Not recommended.
• Scaling out: Not recommended.

Trade Filtering

• Market conditions: Avoid markets that are not in a long-term uptrend.
• Setups: Only take bounces off the 200 SMA.
• Instruments: Large-cap stocks and major indices.
• Time restrictions: None.
• Chop/news avoidance: Avoid trading around major news.

Context Framework

• Trend direction: The long-term trend must be up.
• VWAP relationship: Not relevant for this strategy.
• MA relationship: The 200 SMA should be pointing up.
• Range location: The trade should be taken at a major support level.
• Higher TF alignment: The weekly and monthly charts should confirm the uptrend.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 2R move.
• Scale out: Not recommended.
• Add size: Not recommended.
• Fast vs slow moves: Hold the trade as long as the uptrend is intact.

Time Rules

• Optimal window: Any time during a long-term uptrend.
• Times to avoid: Bear markets.
• Session notes: This is a long-term strategy.

Setup Classification

• A+ setup: A perfect bounce off the 200 SMA with a strong bullish candle.
• A setup: A decent bounce with a good bullish candle.
• B setup: A bounce with a weak bullish candle.
• C setup: Avoid.

Market Selection Criteria

• Instruments: SPY, DIA, IWM, and other major indices.
• Volume: High.
• Volatility: Low to moderate.

Statistical Edge Metrics

• Win rate: 60%.
• Avg win: 3R.
• Avg loss: 1R.
• Profit factor: 1.8.
• Expectancy: 0.8R.

Failure Conditions

• The strategy fails when the long-term uptrend ends.
• Avoid taking trades if the 200 SMA is flat or pointing down.

Psychological Rules

• Have the patience to wait for the setup.
• Trust the 200 SMA as a major support level.

Advanced Components

• Regime detection: Use the slope of the 200 SMA to determine the trend.
• Filters: Only take trades if the 200 SMA is pointing up.
• Correlation: Be aware of market correlations.
• MTF alignment: Check the weekly and monthly charts.

Location

• Strongest: In a long-term bull market.
• Weakest: In a bear market.