Futures Limit Move Trade

Entry Logic

• Exact Entry Trigger: Enter long when a futures contract is limit down. Enter short when a futures contract is limit up.
• Confirmation: The limit move should be caused by a major news event.
• Timeframe: Daily chart.
• Location Context: Not applicable.
• Market Condition: A market that has experienced a limit move.

Exit Logic

• Profit Targets: A fixed target based on the expected mean reversion.
• Scaling Out: Not recommended.
• Trailing Stop: Not used.
• Signal Failure Exit: Exit if the market does not reverse after the limit move.
• Opposite Signal Exit: Not applicable.
• Time Expiration: Exit the trade within a few days.
• Momentum Loss: Not applicable.

Stop Loss Structure

• Hard Stop: A fixed stop based on a percentage of the account value.
• Soft Stop: Not used.
• Max Dollar Loss: Varies by contract.
• Max Percent Loss: 2% of account capital.
• Structural Stop: Not applicable.

Risk Management Framework

• Risk Per Trade: 1% of account capital.
• Maximum Daily Loss Limit: Not applicable.
• Maximum Weekly Loss Limit: Not applicable.
• Maximum Drawdown: 15% from peak equity.
• R:R Requirement: Varies.

Position Sizing Model

• Sizing Approach: Fixed contract size.
• Volatility Adjustment: Not applicable.
• Conviction Sizing: Not applicable.
• Scaling In: Not recommended.
• Scaling Out: Not recommended.

Trade Filtering

• Market Conditions to Avoid: A market that is not experiencing a limit move.
• Specific Setups Required: A limit move in a futures contract.
• Instruments: Any futures contract with daily price limits.
• Time Restrictions: Can be traded at any time.
• Chop/News Avoidance: This is a news-driven trade.

Context Framework

• Trend Direction: Not applicable.
• VWAP Relationship: Not applicable.
• MA Relationship: Not applicable.
• Range Location: Not applicable.
• Higher TF Alignment: Not applicable.

Trade Management Rules

• Breakeven: Not applicable.
• Scale Out: Not applicable.
• Add Size: Not recommended.
• Fast vs Slow Moves: This can be a fast-moving strategy. Be prepared for quick price changes.

Time Rules

• Optimal Trading Window: Following a limit move.
• Times to Avoid: Any other time.
• Session Notes: This strategy can be traded in any session.

Setup Classification

• A+ Setup: A limit move caused by a major, unexpected news event.
• A Setup: A limit move with a clear catalyst.
• B Setup: A limit move with an unclear catalyst.
• C Setup: Avoid. No limit move.

Market Selection Criteria

• Instruments: Any futures contract with daily price limits.
• Volume/Liquidity: High volume and liquidity are essential.
• Volatility: Extreme volatility is expected.

Statistical Edge Metrics

• Win Rate: 60-70%.
• Avg Win: Varies.
• Avg Loss: Varies.
• Profit Factor: Varies.
• Expectancy: Varies.

Failure Conditions

• When Strategy Fails: When the market continues to trend in the direction of the limit move.
• Specific Scenarios to Avoid: Trading this strategy without a clear understanding of the catalyst for the limit move.

Psychological Rules

• Mental Discipline: This is a contrarian strategy that requires a strong stomach. You are buying when everyone else is selling, or vice versa.

Advanced Components

• Regime Detection: Not applicable.
• Filters: Not applicable.
• Correlation: Not applicable.
• MTF Alignment: Not applicable.

Location

• Where Strongest: After a major, emotional price move.
• Where Weakest: In a market that is trending strongly.