8/21 EMA Cross Day Trade

Entry Logic

• Entry trigger: The 8 EMA crosses the 21 EMA.
• Confirmation: A candle closes on the other side of the 21 EMA.
• Timeframe: 5-minute chart.
• Location context: The cross happens after a period of consolidation.
• Market condition: A new intraday trend is starting.

Exit Logic

• Profit target: 2R or the next intraday support/resistance level.
• Scaling out: Not recommended.
• Trailing stop: Trail the stop on the other side of the 21 EMA.
• Signal failure: Exit if the 8 EMA crosses back over the 21 EMA.
• Opposite signal: Exit on a cross in the opposite direction.
• Time expiration: Exit by the end of the day.
• Momentum loss: Exit if momentum fades.

Stop Loss Structure

• Hard stop: Below the low of the candle before the cross (for longs) or above the high (for shorts).
• Soft stop: A close on the wrong side of the 21 EMA.
• Max dollar loss: $100 per trade.
• Max percent loss: 1% of account.
• Structural stop: Below the recent consolidation range.

Risk Management Framework

• Risk per trade: 0.75% of account.
• Daily limit: 3 losing trades.
• Weekly limit: 4% drawdown.
• Max drawdown: 12%.
• R:R requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional (0.75% 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 choppy, sideways markets.
• Setups: Only take the first cross after a period of consolidation.
• Instruments: Any liquid instrument.
• Time restrictions: Avoid trading in the last hour of the day.
• Chop/news avoidance: Avoid trading around major news.

Context Framework

• Trend direction: A new intraday trend is starting.
• VWAP relationship: The cross should be in the direction of VWAP.
• MA relationship: The 8 and 21 EMAs are crossing.
• Range location: The trade is taken on a breakout of a consolidation range.
• Higher TF alignment: The 15-minute chart should confirm the new trend.

Trade Management Rules

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

Time Rules

• Optimal window: 9:30 AM - 3:00 PM EST.
• Times to avoid: The last hour of the day.
• Session notes: Works well in the morning and afternoon sessions.

Setup Classification

• A+ setup: The first cross after a tight consolidation, with high volume.
• A setup: A cross after a moderate consolidation.
• B setup: A cross in a choppy market.
• C setup: Avoid.

Market Selection Criteria

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

Statistical Edge Metrics

• Win rate: 50%.
• Avg win: 2R.
• Avg loss: 1R.
• Profit factor: 1.0.
• Expectancy: 0.0R.

Failure Conditions

• The strategy fails in choppy, sideways markets.
• Avoid taking trades if the cross is not clear.

Psychological Rules

• Be patient and wait for the cross.
• Do not get faked out by false crosses.

Advanced Components

• Regime detection: Use the ADX to confirm the trend strength.
• Filters: Only take trades if the ADX is rising.
• Correlation: Be aware of market correlations.
• MTF alignment: Check the 15-minute chart for confirmation.

Location

• Strongest: At the beginning of a new intraday trend.
• Weakest: In a choppy, sideways market.