Leveraged ETF Momentum (TQQQ/SQQQ)

Entry Logic

• Exact Entry Trigger: Enter long TQQQ on a 5-minute opening range breakout to the upside.
• Confirmation: The breakout must occur on high volume.
• Timeframe: 5-minute chart.
• Location Context: The breakout should occur above the daily VWAP.
• Market Condition: A strong, trending market.

Exit Logic

• Profit Targets: 2R.
• Scaling Out: Not recommended.
• Trailing Stop: Trail the stop below the low of each new 5-minute candle.
• Signal Failure Exit: Exit if the breakout fails and the price closes back inside the opening range.
• Opposite Signal Exit: Not applicable.
• Time Expiration: Exit at the end of the day.
• Momentum Loss: Exit if the 5-minute RSI drops below 50.

Stop Loss Structure

• Hard Stop: Below the low of the 5-minute opening range.
• Soft Stop: Not applicable.
• Max Dollar Loss: 0.5% of account equity.
• Max Percent Loss: 1.5% of the position's value.
• Structural Stop: Not applicable.

Risk Management Framework

• Risk Per Trade: 0.5% of the account.
• Maximum Daily Loss Limit: 1.5% of the account.
• Maximum Weekly Loss Limit: 3% of the account.
• Maximum Drawdown: 10% from peak equity.
• R:R Requirement: Minimum 2:1.

Position Sizing Model

• Sizing Approach: Fixed fractional sizing.
• Volatility Adjustment: Position size is adjusted based on the size of the opening range.
• Conviction Sizing: Not applicable.
• Scaling In: Not recommended.
• Scaling Out: Not recommended.

Trade Filtering

• Market Conditions to Avoid: Choppy, range-bound markets.
• Specific Setups Required: A clear opening range breakout.
• Instruments: TQQQ or SQQQ.
• Time Restrictions: Only trade the first hour of the day.
• Chop/News Avoidance: Avoid trading around major market-moving news.

Context Framework

• Trend Direction: The underlying index (NDX) should be in a strong trend.
• VWAP Relationship: The breakout should occur above the daily VWAP.
• Moving Average Relationship: The price should be above the 8 and 21-period EMAs on the 5-minute chart.
• Range Location: The breakout should occur from a tight opening range.
• Higher TF Alignment: The daily chart of the NDX should confirm the trend.

Trade Management Rules

• Breakeven: Move stop to breakeven after the price moves 1R in your favor.
• Scale Out: Not applicable.
• Add Size: Not applicable.
• Fast vs Slow Moves: This strategy is designed for fast-moving markets.

Time Rules

• Optimal Trading Window: 9:30 AM - 10:30 AM EST.
• Times to Avoid: The rest of the day.
• Session Notes: This is a day trading strategy.

Setup Classification

• A+ Setup: A clean breakout from a tight opening range on high volume.
• A Setup: A breakout from a wider opening range.
• B Setup: A breakout on low volume.
• C Setup: A choppy opening range.

Market Selection Criteria

• Instruments: TQQQ or SQQQ.
• Volume/Liquidity: High volume is essential.
• Volatility: These are highly volatile instruments.

Statistical Edge Metrics

• Expected Win Rate: 45-50%.
• Average Win Size: 2.5x the average loss.
• Average Loss Size: 1x the defined risk.
• Profit Factor: 1.8 - 2.2.
• Expectancy Per Trade: Positive, aiming for > 0.4R per trade.

Failure Conditions

• Market Conditions: Fails in choppy, range-bound markets.
• Specific Scenarios: A failed opening range breakout.

Psychological Rules

• Key Mental Discipline: Requires the ability to act quickly and manage risk in a fast-moving market.

Advanced Components

• Market Regime Detection: Use the VIX to gauge market sentiment. The strategy works best when the VIX is low and falling.
• Volatility/Liquidity Filters: Essential.
• Correlation Filters: Not applicable.
• MTF Alignment: Daily chart confirmation is beneficial.

Location

• Where Strongest: In strongly trending markets.
• Where Weakest: In choppy, range-bound markets.