Event-Driven + Technical Combo

Entry Logic

• Long entry: A positive, unscheduled news event (e.g., FDA approval, activist investor) is released. Wait for the initial spike to fade, and enter on the first pullback to a key technical level (e.g., VWAP, 50% retracement).
• Short entry: A negative, unscheduled news event (e.g., SEC investigation, CEO departure) is released. Wait for the initial drop to fade, and enter on the first rally to a key technical level.
• Confirmation: High volume on the initial news spike, followed by lower volume on the pullback.
• Timeframe: 5-minute chart.
• Location: At a logical technical level after the news.
• Market Condition: A stock in play due to a news catalyst.

Exit Logic

• Profit Target: The high of the initial news spike for longs, the low for shorts, or 3R.
• Scaling Out: Scale out 50% at 2R.
• Trailing Stop: Trail a stop below the 20 EMA on the 5-minute chart.
• Signal Failure: If the stock takes out the low of the news spike (for longs) or the high (for shorts).
• Opposite Signal: Not applicable.
• Time Expiration: Exit by the end of the day.
• Momentum Loss: If the post-news trend stalls.

Stop Loss Structure

• Hard Stop: Below the low of the pullback for longs, above the high for shorts.
• Soft Stop: If the stock starts to consolidate and lose momentum.
• Max Dollar Loss: $300 per trade.
• Max Percent Loss: 1.5% of account.
• Structural Stop: Below the low of the day for longs, above the high of the day for shorts.

Risk Management Framework

• Risk Per Trade: 1.5% of account.
• Daily Limit: 1 losing trade.
• Weekly Limit: 3% drawdown.
• Max Drawdown: 10%.
• R:R Requirement: Minimum 2.5:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.
• Volatility Adjustment: Reduce size due to the high volatility of news-driven stocks.
• Conviction Sizing: Not recommended.
• Scaling In: Not recommended.
• Scaling Out: Scale out at 2R.

Trade Filtering

• Market Conditions: Only trade stocks with a significant, unscheduled news catalyst.
• Setups: Must be a clean pullback to a technical level.
• Instruments: Any stock with a news catalyst.
• Time Restrictions: The first few hours after the news is released.
• Chop/News Avoidance: The strategy is based on news.

Context Framework

• Trend Direction: The news determines the direction.
• VWAP Relationship: VWAP is often a key level for entry.
• MA Relationship: Not a primary concern.
• Range Location: Not applicable.
• Higher TF Alignment: Not required.

Trade Management Rules

• Breakeven: Move stop to breakeven at 1.5R.
• Scale Out: Scale out at 2R.
• Add Size: Not recommended.
• Fast vs Slow Moves: Be prepared for fast moves.

Time Rules

• Optimal Window: Immediately following the news release.
• Times to Avoid: Pre-announced news events (e.g., earnings).
• Session Notes: A reactive, news-based strategy.

Setup Classification

• A+ Setup: A major, unexpected news event with a clean pullback to VWAP.
• A Setup: A good news event with a decent pullback.
• B Setup: A minor news event or a messy pullback.
• C Setup: No clear setup.

Market Selection Criteria

• Instruments: Any stock, but biotech and tech are common.
• Volume: Must have a massive surge in volume.
• Volatility: Extreme volatility is expected.

Statistical Edge Metrics

• Win Rate: 45%.
• Avg Win: 4R.
• Avg Loss: 1R.
• Profit Factor: 1.8.
• Expectancy: 0.8R per trade.

Failure Conditions

• Market Conditions: If the news is quickly discredited or proves to be false.
• Specific Scenarios: The stock continues to move in one direction without any pullbacks.

Psychological Rules

• Mental Discipline: Requires the ability to remain calm and objective in a fast-moving, emotional environment.

Advanced Components

• Regime Detection: Not needed.
• Filters: Use a news feed service to get the news as quickly as possible.
• Correlation: Not a concern.
• MTF Alignment: Not required.

Location

• Strongest: On a truly surprising and significant piece of news.
• Weakest: On a minor, expected news item.