Daily Trend + 5-Min Entry

Entry Logic

• Entry trigger: 5-minute chart shows a bullish engulfing candle closing above the 9 EMA.
• Confirmation: Daily chart shows a clear uptrend with price above the 20 SMA.
• Timeframe: Daily for trend, 5-minute for entry.
• Location: Entry taken near a key support level on the 5-minute chart.
• Market condition: Strong trending market on the daily timeframe.

Exit Logic

• Profit target: 2R, or the next major resistance level on the daily chart.
• Scaling out: Scale out 50% at 1R, move stop to breakeven.
• Trailing stop: Trail stop below the 5-minute 20 EMA.
• Signal failure: Exit if the 5-minute chart shows a close below the entry candle's low.
• Opposite signal: Exit on a bearish engulfing candle on the 5-minute chart.
• Time expiration: Exit if the trade is not profitable within 2 hours.
• Momentum loss: Exit if the 5-minute chart shows declining volume and smaller candles.

Stop Loss Structure

• Hard stop: 10 cents below the low of the 5-minute entry candle.
• Soft stop: A close below the 5-minute 20 EMA.
• Max dollar loss: $100 per trade.
• Max percent loss: 1% of account.
• Structural stop: Below the most recent swing low on the 5-minute chart.

Risk Management Framework

• Risk per trade: 0.5% of account.
• Daily limit: 3 losing trades.
• Weekly limit: 5% drawdown.
• Max drawdown: 15%.
• R:R requirement: Minimum 2:1.

Position Sizing Model

• Sizing approach: Fixed fractional, 0.5% of account per trade.
• Volatility adjustment: Reduce size by 50% if the daily ATR is above 5.
• Conviction sizing: A+ setups get 1% risk, B setups get 0.25%.
• Scaling in: Not used in this strategy.
• Scaling out: 50% at 1R, 50% at 2R.

Trade Filtering

• Market conditions: Avoid ranging markets on the daily chart.
• Setups: Only take long trades in a daily uptrend.
• Instruments: High-volume ETFs and large-cap stocks.
• Time restrictions: First 2 hours of the trading session.
• Chop/news avoidance: Avoid trading during major news events.

Context Framework

• Trend direction: Determined by the daily chart's 20 SMA.
• VWAP relationship: Price should be above VWAP on the 5-minute chart.
• MA relationship: 9 EMA above 20 EMA on the 5-minute chart.
• Range location: Entry taken in the lower third of the daily range.
• Higher TF alignment: Daily and weekly charts should be in an uptrend.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.
• Scale out: At 1R and 2R profit targets.
• Add size: Not used in this strategy.
• Fast vs slow moves: Let fast moves run, take profits on slow moves.

Time Rules

• Optimal window: 9:30 AM - 11:30 AM EST.
• Times to avoid: Mid-day chop from 12:00 PM - 2:00 PM EST.
• Session notes: Strategy performs best in the first half of the day.

Setup Classification

• A+ setup: Perfect alignment of daily trend, 5-minute entry, and volume.
• A setup: Daily trend and 5-minute entry align, but volume is average.
• B setup: Daily trend is present, but 5-minute entry is not ideal.
• C setup: No clear daily trend.

Market Selection Criteria

• Instruments: SPY, QQQ, AAPL, MSFT.
• Volume: Minimum 1 million shares traded daily.
• Volatility: Daily ATR should be between 1 and 5.

Statistical Edge Metrics

• Win rate: 55%.
• Avg win: 2.5R.
• Avg loss: 1R.
• Profit factor: 1.375.
• Expectancy: 0.375R per trade.

Failure Conditions

• Strategy fails when the daily trend is not well-established.
• Avoid using this strategy in choppy or ranging markets.

Psychological Rules

• Patience is required to wait for the daily trend to set up.
• Discipline is needed to stick to the 5-minute entry rules.

Advanced Components

• Regime detection: Use a 50-day SMA on the daily chart to identify the market regime.
• Filters: Avoid taking trades if the VIX is above 30.
• Correlation: Ensure the broader market is moving in the same direction.
• MTF alignment: Daily, weekly, and monthly charts should all be in alignment.

Location

• Strongest: In a clear, trending market on the daily chart.
• Weakest: In a choppy, sideways market.