Higher Timeframe Order Block + Lower Timeframe Entry

Entry Logic

• Entry trigger: 5-minute chart shows a rejection of a higher timeframe order block.
• Confirmation: The higher timeframe (e.g., 4-hour) shows a clear order block.
• Timeframe: 4-hour for order block, 5-minute for entry.
• Location: Entry taken at the 4-hour order block.
• Market condition: Price is reacting to a key supply or demand zone.

Exit Logic

• Profit target: The next major support or resistance level on the 4-hour chart.
• Scaling out: Scale out 50% at 2R.
• Trailing stop: Trail stop below the 5-minute 20 EMA.
• Signal failure: Exit if the 4-hour order block is violated.
• Opposite signal: Exit on a reversal pattern on the 5-minute chart.
• Time expiration: Exit if the trade is not profitable within 2 hours.
• Momentum loss: Exit if volume dries up on the 5-minute chart.

Stop Loss Structure

• Hard stop: Above or below the 4-hour order block.
• Soft stop: A close beyond the order block.
• Max dollar loss: $150 per trade.
• Max percent loss: 1% of account.
• Structural stop: Above or below the most recent swing on the 5-minute chart.

Risk Management Framework

• Risk per trade: 1% of account.
• Daily limit: 3 losing trades.
• Weekly limit: 4% drawdown.
• Max drawdown: 12%.
• R:R requirement: Minimum 2.5:1.

Position Sizing Model

• Sizing approach: Fixed fractional, 1% of account per trade.
• Volatility adjustment: Adjust size based on the size of the order block.
• Conviction sizing: Not used in this strategy.
• Scaling in: Not used in this strategy.
• Scaling out: 50% at 2R.

Trade Filtering

• Market conditions: Avoid trading in the middle of a range.
• Setups: Only take trades at clear higher timeframe order blocks.
• Instruments: Forex pairs and stock indices.
• Time restrictions: Any time of day.
• Chop/news avoidance: Be aware of news events that could invalidate the order block.

Context Framework

• Trend direction: The higher timeframe trend should be considered.
• VWAP relationship: Not a primary factor.
• MA relationship: Not a primary factor.
• Range location: Entry is at a key supply or demand zone.
• Higher TF alignment: The daily chart should be aligned with the 4-hour chart.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1.5R move.
• Scale out: At 2R profit target.
• Add size: Not used in this strategy.
• Fast vs slow moves: Let fast moves run, take partial profits on slow moves.

Time Rules

• Optimal window: Any time of day.
• Times to avoid: Low-volume periods.
• Session notes: Order blocks can be respected at any time.

Setup Classification

• A+ setup: Fresh, untested order block, strong reaction on the 5-minute chart.
• A setup: Order block has been tested once, but still shows a reaction.
• B setup: Order block is old and has been tested multiple times.
• C setup: No clear order block.

Market Selection Criteria

• Instruments: EUR/USD, GBP/USD, SPX, NDX.
• Volume: High liquidity.
• Volatility: Moderate volatility.

Statistical Edge Metrics

• Win rate: 55%.
• Avg win: 3R.
• Avg loss: 1R.
• Profit factor: 1.65.
• Expectancy: 0.65R per trade.

Failure Conditions

• Strategy fails when the order block is not respected.
• Avoid taking trades at old, heavily tested order blocks.

Psychological Rules

• Patience is required to wait for price to reach the order block.
• Discipline is needed to take the trade even if it goes against the short-term momentum.

Advanced Components

• Regime detection: Use the daily chart to identify the market regime.
• Filters: Avoid taking trades if the order block is very large.
• Correlation: Check for correlation with other major pairs or indices.
• MTF alignment: Daily and 4-hour charts should be aligned.

Location

• Strongest: At fresh, untested order blocks.
• Weakest: At old, heavily tested order blocks.