Fibonacci + VWAP Confluence

Entry Logic

• Long entry: Price pulls back to a key Fibonacci retracement level (50% or 61.8%) that coincides with the VWAP. Entry on a bullish reversal candle.
• Short entry: Price rallies to a key Fibonacci retracement level (50% or 61.8%) that coincides with the VWAP. Entry on a bearish reversal candle.
• Confirmation: Volume confirmation on the entry candle.
• Timeframe: 15-minute chart.
• Location: Confluence of Fibonacci level and VWAP.
• Market Condition: Trending market.

Exit Logic

• Profit Target: The next Fibonacci extension level or 3R.
• Scaling Out: Scale out 50% at 2R.
• Trailing Stop: Trail stop below the 20-period EMA.
• Signal Failure: Exit if price closes back across the VWAP.
• Opposite Signal: Exit on a valid opposite signal.
• Time Expiration: Exit if the trade is not profitable within 4 hours.
• Momentum Loss: Exit if volume dries up.

Stop Loss Structure

• Hard Stop: Below the low of the entry candle for longs, above the high for shorts.
• Soft Stop: A close back across the VWAP.
• Max Dollar Loss: $200 per trade.
• Max Percent Loss: 1% of account.
• Structural Stop: Below the swing low for longs, above the swing high for shorts.

Risk Management Framework

• Risk Per Trade: 1% of account.
• Daily Limit: 2 losing trades.
• Weekly Limit: 5% drawdown.
• Max Drawdown: 10%.
• R:R Requirement: Minimum 3:1.

Position Sizing Model

• Sizing Approach: Fixed fractional, 1% of account at risk.
• Volatility Adjustment: Use a smaller position size if the stop loss is wider than usual.
• Conviction Sizing: A+ setups get 1.5% risk, B setups get 0.5%.
• Scaling In: Not recommended.
• Scaling Out: Scale out 50% at 2R.

Trade Filtering

• Market Conditions: Avoid choppy markets.
• Setups: Only take setups with clear confluence between the Fibonacci level and VWAP.
• Instruments: Any liquid stock or future.
• Time Restrictions: No trading in the first hour of the session.
• Chop/News Avoidance: Avoid trading around major news events.

Context Framework

• Trend Direction: Trade in the direction of the daily trend.
• VWAP Relationship: Price must be reacting to VWAP.
• MA Relationship: Price should be on the correct side of the 200 SMA on the daily chart.
• Range Location: Not applicable.
• Higher TF Alignment: The daily chart should show a clear trend.

Trade Management Rules

• Breakeven: Move stop to breakeven after 2R of profit.
• Scale Out: Scale out 50% at 2R.
• Add Size: Not recommended.
• Fast vs Slow Moves: Let fast moves run to the target.

Time Rules

• Optimal Window: 10:30 AM - 2:30 PM EST.
• Times to Avoid: First hour and last 30 minutes of the session.
• Session Notes: Works well in all sessions.

Setup Classification

• A+ Setup: Perfect confluence of Fibonacci level and VWAP, strong trend, and higher timeframe alignment.
• A Setup: Good confluence, decent trend.
• B Setup: Confluence is not perfect, or the trend is weak.
• C Setup: No clear confluence or trend.

Market Selection Criteria

• Instruments: ES, NQ, and high-volume stocks.
• Volume: Minimum 1 million shares traded daily for stocks.
• Volatility: Moderate volatility is best.

Statistical Edge Metrics

• Win Rate: 50%.
• Avg Win: 3R.
• Avg Loss: 1R.
• Profit Factor: 1.5.
• Expectancy: 0.5R per trade.

Failure Conditions

• Market Conditions: Fails in choppy, range-bound markets.
• Specific Scenarios: Fails when the Fibonacci levels are not being respected.

Psychological Rules

• Mental Discipline: Must be patient and wait for the confluence setup.

Advanced Components

• Regime Detection: Use the ADX indicator to determine the strength of the trend.
• Filters: Avoid trades if the VIX is above 30.
• Correlation: Avoid taking trades on highly correlated instruments.
• MTF Alignment: Daily and 4-hour charts should be in alignment.

Location

• Strongest: In a strong, trending market.
• Weakest: In a choppy, range-bound market.