Fibonacci Extension Target (261.8%)

Entry Logic

• Exact Entry Trigger: Entry on a breakout of a previous swing high/low.
• Confirmation: A massive surge in volume and a breakout from a long-term consolidation.
• Timeframe: Weekly chart.
• Location Context: The breakout should be a major technical event.
• Market Condition: A new bull or bear market is beginning.

Exit Logic

• Profit Target(s): The 261.8% Fibonacci extension level.
• Scaling Out: Hold the entire position to the target.
• Trailing Stop: Use a 10-week moving average as a trailing stop.
• Exit on Signal Failure: A close back inside the consolidation range.
• Exit on Opposite Signal: A major trend reversal.
• Exit on Time Expiration: None.
• Exit on Momentum Loss: A significant drop in momentum.

Stop Loss Structure

• Hard Stop: Place the stop loss deep inside the consolidation range.
• Soft Stop: A weekly close back inside the range.
• Maximum Dollar Loss: $1000 per trade.
• Maximum Percent Loss: 5% of the account.
• Structural Stop: Below a major long-term support level.

Risk Management Framework

• Risk Per Trade: 4% of the account.
• Maximum Daily Loss Limit: None.
• Maximum Weekly Loss Limit: None.
• Maximum Drawdown: 50%.
• Risk-Reward Ratio: Minimum 1:5.

Position Sizing Model

• Sizing Approach: Fixed percentage.
• Volatility-Based Adjustment: None.
• Conviction-Based Sizing: A+ setups get 5% risk, A setups 4%, B setups 3%.
• Scaling In: Not recommended.
• Scaling Out: At the target.

Trade Filtering

• Market Conditions to Avoid: Any market that is not in a clear, long-term trend.
• Specific Setups Required: A major, multi-year breakout.
• Instrument Requirements: All major asset classes.
• Time of Day Restrictions: None.
• Chop/News Avoidance: Be aware of major global economic events.

Context Framework

• Trend Direction: Aligned with the monthly trend.
• VWAP Relationship: Not applicable.
• Moving Average Relationship: The breakout should be supported by all major long-term moving averages.
• Range Location: The breakout from a range is the setup.
• Higher Timeframe Alignment: Essential.

Trade Management Rules

• Breakeven: After 1R of profit.
• Scale Out: At the target.
• Add Size: No.
• Fast vs. Slow Moves: This is a long-term investment strategy.

Time Rules

• Optimal Trading Window: None.
• Times to Avoid: None.
• Session-Specific Notes: None.

Setup Classification

• A+ Setup: A breakout from a decade-long consolidation.
• A Setup: A breakout from a multi-year consolidation.
• B Setup: A breakout from a one-year consolidation.
• C Setup: A weak breakout.

Market Selection Criteria

• Instrument Requirements: All.
• Volume/Liquidity: High.
• Volatility: Moderate.

Statistical Edge Metrics

• Expected Win Rate: 40-45%
• Average Win: 10R
• Average Loss: 1R
• Profit Factor: 4.0
• Expectancy Per Trade: +3R

Failure Conditions

• Market Conditions: A failed breakout.
• Specific Scenarios: A major global event that causes a market crash.

Psychological Rules

• Mental Discipline: The ability to hold a position for years.

Advanced Components

• Market Regime Detection: None.
• Volatility/Liquidity Filters: None.
• Correlation Filters: None.
• Multi-Timeframe Alignment: Crucial.

Location

• Where Strongest: At the beginning of a new secular bull or bear market.
• Where Weakest: In a range-bound market.