Three White Soldiers Continuation

Entry Logic

• Exact entry trigger: Buy on the open of the candle following the third consecutive long bullish candle.
• Confirmation requirements: Three consecutive long-bodied bullish candles, each closing higher than the previous one. Each candle should open within the body of the previous candle. Volume should ideally increase with each candle.
• Timeframe required: Daily chart.
• Location context: The pattern should appear after a period of consolidation or at the beginning of a new uptrend.
• Market condition requirement: A market that is starting to trend up.

Exit Logic

• Profit target(s): A measured move target based on the height of the consolidation period preceding the pattern.
• Scaling out rules: N/A.
• Trailing stop rules: Use the low of the previous candle as a trailing stop.
• Exit on signal failure: A close below the midpoint of the third candle is a warning sign.
• Exit on opposite signal: A strong bearish reversal pattern.
• Exit on time expiration: N/A.
• Exit on momentum loss: A series of small candles or Dojis after entry.

Stop Loss Structure

• Hard stop location: Below the low of the first candle in the pattern.
• Soft stop rules: N/A.
• Maximum dollar loss per trade: 1% of capital.
• Maximum percent loss per trade: N/A.
• Structural stop placement: Below the recent swing low.

Risk Management Framework

• Risk per trade: 1%.
• Maximum daily loss limit: 2%.
• Maximum weekly loss limit: 5%.
• Maximum drawdown allowed: 15%.
• Risk-reward ratio requirement: 1:3.

Position Sizing Model

• Recommended sizing approach: Fixed risk.
• Volatility-based adjustment: N/A.
• Conviction-based sizing (A+/A/B setup): A+ for a pattern breaking out of a long-term base. A for a pattern after a shorter consolidation. B for a pattern with decreasing volume.
• Scaling in rules: N/A.
• Scaling out rules: N/A.

Trade Filtering

• Market conditions to avoid: A market that is already overbought.
• Specific setups required: A clear three white soldiers pattern.
• Stock/instrument requirements: Stocks with a history of trending.
• Time of day restrictions: N/A.
• Chop/news avoidance rules: N/A.

Context Framework

• Trend direction assessment: The beginning of an uptrend.
• VWAP relationship: Price should be above VWAP.
• Moving average relationship: Price should be breaking above key moving averages.
• Range location: Breaking out of a consolidation range.
• Higher timeframe alignment: The weekly chart should be showing signs of bottoming.

Trade Management Rules

• When to move stop to breakeven: After a 1R move.
• When to scale out: N/A.
• When to add size: N/A.
• How to handle fast moves vs slow moves: Let it run.

Time Rules

• Optimal trading window: N/A.
• Times to avoid: N/A.
• Session-specific notes: N/A.

Setup Classification

• A+ setup criteria: A textbook pattern with increasing volume breaking a major resistance.
• A setup criteria: A standard pattern.
• B setup criteria: A pattern with one or two shorter candles.
• C setup criteria (avoid): A pattern that occurs after a very long uptrend.

Market Selection Criteria

• Instrument requirements: Stocks.
• Volume/liquidity requirements: High volume.
• Volatility requirements: N/A.

Statistical Edge Metrics

• Expected win rate: 65-70%
• Average win size: 3R
• Average loss size: 1R
• Profit factor: 2.0 - 2.5
• Expectancy per trade: 1R.

Failure Conditions

• Market conditions where strategy fails: When the market is in a long-term downtrend.
• Specific scenarios to avoid: Chasing the pattern if it has already moved too far.

Psychological Rules

• Key mental discipline requirements: The ability to hold a winning trade.

Advanced Components

• Market regime detection: N/A.
• Volatility/liquidity filters: N/A.
• Correlation filters: N/A.
• Multi-timeframe alignment: The weekly chart should support a bullish bias.

Location

• Where this setup is strongest: At the beginning of a new bull market.
• Where this setup is weakest: In a bear market.
• Location changes outcome: Yes.