FDA Approval/Denial Trade

Entry Logic

• Entry trigger: News of an FDA approval or denial for a drug.
• Confirmation: High volume and a strong price move in the direction of the news.
• Timeframe: 1-minute and 5-minute charts.
• Location context: Trade in the direction of the trend, above or below the 9 and 20 EMAs.
• Market condition: High volatility and a clear market bias.

Exit Logic

• Profit targets: Take profits at key resistance or support levels.
• Scaling out: Scale out of the position as it moves in your favor.
• Trailing stop: Use a trailing stop to protect profits.
• Signal failure exit: Exit if the stock reverses and starts trading against the news.
• Opposite signal exit: Not applicable.
• Time expiration: Exit the trade by the end of the day.
• Momentum loss: Exit if momentum slows down.

Stop Loss Structure

• Hard stop: Place a stop loss below a recent support or resistance level.
• Soft stop: Not applicable.
• Max dollar loss: Limit the maximum loss to a predetermined amount.
• Max percent loss: Limit the maximum loss to a percentage of your account.
• Structural stop: Place the stop loss below a key support or resistance level.

Risk Management Framework

• Risk per trade: 1% of the account.
• Daily limit: Stop trading after two consecutive losses.
• Weekly limit: Stop trading for the week if down 4%.
• Max drawdown: 10%.
• R:R requirement: Minimum 3:1 risk/reward ratio.

Position Sizing Model

• Sizing approach: Fixed fractional position sizing.
• Volatility adjustment: Reduce position size on high volatility days.
• Conviction sizing: A+ setups get full size, A setups get half size, B setups get quarter size.
• Scaling in/out: Scale in on pullbacks. Scale out at pre-defined targets.

Trade Filtering

• Market conditions: Only trade this strategy when there is clear news and high volume.
• Setups: Only trade A+ or A setups.
• Instruments: Only trade biotech stocks with a history of reacting to FDA news.
• Time restrictions: Trade during the first few hours after the news is released.
• Chop/news avoidance: Avoid trading if the market is choppy or if there is conflicting news.

Context Framework

• Trend direction: Trade in the direction of the news.
• VWAP relationship: Trade in the direction of VWAP.
• MA relationship: Trade in the direction of the moving averages.
• Range location: Not applicable.
• Higher TF alignment: Not applicable.

Trade Management Rules

• Breakeven: Move the stop loss to breakeven after the first target is hit.
• Scale out: As defined in the exit logic.
• Add size: Not applicable.
• Fast vs slow moves: Let the winners run on fast moves. Take profits quicker on slow moves.

Time Rules

• Optimal window: The first few hours after the news is released.
• Times to avoid: Avoid trading after the initial momentum has faded.
• Session notes: This is a news-driven trade, so be prepared for high volatility.

Setup Classification

• A+ criteria: Clear news, high volume, and a strong trend.
• A criteria: Most conditions are met, but not all.
• B criteria: Some conditions are met, but the setup is not ideal.
• C criteria: Avoid trading.

Market Selection Criteria

• Instruments: Biotech stocks with upcoming FDA decisions.
• Volume: High volume is essential.
• Volatility: High volatility is expected.

Statistical Edge Metrics

• Win rate: 50%.
• Avg win: 5R.
• Avg loss: 1R.
• Profit factor: 2.5.
• Expectancy: 2R per trade.

Failure Conditions

• The market does not react to the news as expected.
• The stock gets halted.

Psychological Rules

• This is a high-risk trade. Be prepared for large price swings.
• Do not get greedy. Take profits at your targets.

Advanced Components

• Regime detection: Not applicable.
• Filters: Not applicable.
• Correlation: Not applicable.
• MTF alignment: Not applicable.

Location

• Strongest: When the news is unexpected.
• Weakest: When the news is already priced in.