Fractal Moving Average Breakout

Entry Logic

• Entry trigger: Price breaks above a fractal high or below a fractal low that is also above/below a moving average.
• Confirmation: A strong candle closes outside the fractal and the moving average.
• Timeframe: 1-hour chart.
• Location context: The breakout occurs in the direction of the moving average slope.
• Market condition: A trending market.

Exit Logic

• Profit target: 2R or the next significant support/resistance level.
• Scaling out: Not recommended.
• Trailing stop: Trail the stop on the other side of the moving average.
• Signal failure: Exit if the breakout fails and price returns below the fractal.
• Opposite signal: Exit on a reversal signal.
• Time expiration: None.
• Momentum loss: Exit if momentum fades after the breakout.

Stop Loss Structure

• Hard stop: On the other side of the moving average.
• Soft stop: A close back below the fractal.
• Max dollar loss: $200 per trade.
• Max percent loss: 2% of account.
• Structural stop: On the other side of the moving average.

Risk Management Framework

• Risk per trade: 1.5% of account.
• Daily limit: 2 losing trades.
• Weekly limit: 5% drawdown.
• Max drawdown: 15%.
• R:R requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional (1.5% 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 clear fractal breakouts.
• Instruments: Any liquid instrument.
• Time restrictions: None.
• Chop/news avoidance: Avoid trading around major news.

Context Framework

• Trend direction: The trend is confirmed by the slope of the moving average.
• VWAP relationship: Trade in the direction of VWAP.
• MA relationship: The breakout is in the direction of the moving average.
• Range location: The trade is taken on a breakout of a range.
• Higher TF alignment: The higher timeframe chart should confirm the 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 trend.

Time Rules

• Optimal window: Any time during a trending market.
• Times to avoid: Choppy, non-trending periods.
• Session notes: Works well in all sessions.

Setup Classification

• A+ setup: A clear fractal breakout with high volume.
• A setup: A decent fractal breakout.
• B setup: A weak fractal breakout.
• C setup: Avoid.

Market Selection Criteria

• Instruments: Any liquid instrument.
• Volume: High on the breakout.
• Volatility: Moderate.

Statistical Edge Metrics

• Win rate: 50%.
• Avg win: 2.5R.
• Avg loss: 1R.
• Profit factor: 1.25.
• Expectancy: 0.25R.

Failure Conditions

• The strategy fails when the breakout is false.
• Avoid taking trades if the fractal is not clear.

Psychological Rules

• Be patient and wait for the fractal breakout.
• Do not get faked out by false breakouts.

Advanced Components

• Regime detection: Use a longer-term moving average to confirm the trend.
• Filters: Only take trades in the direction of the longer-term trend.
• Correlation: Be aware of market correlations.
• MTF alignment: Check the higher timeframe chart for confirmation.

Location

• Strongest: In a trending market.
• Weakest: In a choppy, sideways market.