Daily Gap + 15-Min Confirmation

Entry Logic

• Entry trigger: 15-minute chart shows a breakout of the opening range in the direction of the gap.
• Confirmation: The stock has gapped up or down on the daily chart with high volume.
• Timeframe: Daily for gap, 15-minute for confirmation.
• Location: Entry taken on a breakout of the 15-minute opening range.
• Market condition: Strong momentum in the direction of the gap.

Exit Logic

• Profit target: The next major support or resistance level on the daily chart.
• Scaling out: Scale out 50% at 2R.
• Trailing stop: Trail stop below the 15-minute 20 EMA.
• Signal failure: Exit if the gap starts to fill.
• Opposite signal: Exit on a reversal pattern on the 15-minute chart.
• Time expiration: Exit if the trade is not profitable by the end of the day.
• Momentum loss: Exit if volume dries up on the 15-minute chart.

Stop Loss Structure

• Hard stop: Below the low of the 15-minute opening range.
• Soft stop: A close back inside the opening range.
• Max dollar loss: $150 per trade.
• Max percent loss: 1% of account.
• Structural stop: Below the most recent swing low on the 15-minute chart.

Risk Management Framework

• Risk per trade: 1% of account.
• Daily limit: 2 losing trades.
• Weekly limit: 3% drawdown.
• Max drawdown: 10%.
• R:R requirement: Minimum 2.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional, 1% of account per trade.
• Volatility adjustment: Not used in this strategy.
• Conviction sizing: A+ setups get 1.5% risk.
• Scaling in: Not used in this strategy.
• Scaling out: 50% at 2R.

Trade Filtering

• Market conditions: Only trade strong gap days.
• Setups: Only trade in the direction of the gap.
• Instruments: Stocks that are gapping up or down on news.
• Time restrictions: First hour of the trading day.
• Chop/news avoidance: The gap is the news.

Context Framework

• Trend direction: The direction of the gap.
• VWAP relationship: Price should be moving away from VWAP.
• MA relationship: 15-minute MAs should be aligned with the gap direction.
• Range location: Entry is at the breakout of the opening range.
• Higher TF alignment: Not required, but a gap in the direction of the daily trend is a bonus.

Trade Management Rules

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

Time Rules

• Optimal window: 9:30 AM - 10:30 AM EST.
• Times to avoid: After the first hour of trading.
• Session notes: The first hour is critical for this strategy.

Setup Classification

• A+ setup: Large gap, high volume, clean breakout of the opening range.
• A setup: Good gap, but breakout is not as clean.
• B setup: Small gap, low volume.
• C setup: No gap.

Market Selection Criteria

• Instruments: Stocks in the news.
• Volume: High pre-market volume.
• Volatility: High intraday volatility.

Statistical Edge Metrics

• Win rate: 60%.
• Avg win: 3R.
• Avg loss: 1R.
• Profit factor: 1.8.
• Expectancy: 0.8R per trade.

Failure Conditions

• Strategy fails when the gap fills.
• Avoid using this strategy on low-volume gaps.

Psychological Rules

• Aggressiveness is needed to take the trade in a fast-moving market.
• Discipline is required to cut the trade if the gap starts to fill.

Advanced Components

• Regime detection: Not applicable for this strategy.
• Filters: Only trade stocks with a high relative volume.
• Correlation: Check if the sector is also gapping in the same direction.
• MTF alignment: Not required.

Location

• Strongest: On strong gap days with high volume.
• Weakest: On small, insignificant gaps.