Halt Resume Momentum Trade

Entry Logic

• Exact Entry Trigger: A stock resumes trading after a news-related halt (e.g., T1, T2).
• Confirmation: The news is positive, and the stock opens significantly higher and holds the opening price for the first minute.
• Timeframe: 1-minute chart.
• Location Context: The stock has gapped up on the resume.
• Market Condition: Any, as this is a news-driven event.

Exit Logic

• Profit Target(s): 10-20% gain, depending on the strength of the news.
• Scaling Out: Sell half at 10%, trail the rest with the 5-minute EMA.
• Trailing Stop: A break below the resumption opening price.
• Signal Failure: The stock fails to hold its opening price and flushes down.
• Opposite Signal: The stock puts in a bearish engulfing candle on the 5-minute chart.
• Time Expiration: 1 hour. The initial momentum is what this trade captures.
• Momentum Loss: Volume dries up, and the stock begins to consolidate.

Stop Loss Structure

• Hard Stop: 5% below the resumption open price.
• Soft Stop: A visual break of the opening price on the 1-minute chart.
• Maximum Dollar Loss: $500 per trade.
• Maximum Percent Loss: 5% of the trade value.
• Structural Stop: The low of the first 1-minute candle after resumption.

Risk Management Framework

• Risk Per Trade: 0.5% of the account.
• Maximum Daily Loss: 1.5% of the account.
• Maximum Weekly Loss: 4% of the account.
• Maximum Drawdown: 15% of the account.
• R:R Requirement: Minimum 3:1.

Position Sizing Model

• Sizing Approach: Use smaller position sizes (e.g., 1/4 to 1/2 normal size) due to extreme volatility.
• Volatility Adjustment: The setup is inherently volatile; size is the primary risk management tool.
• Conviction Sizing: Not applicable; all are high-risk.
• Scaling In: Not recommended.
• Scaling Out: As per exit logic.

Trade Filtering

• Market Conditions to Avoid: None, but be aware of overall market sentiment.
• Specific Setups: Only trade halts for significant, game-changing news (e.g., FDA approval, buyout offer).
• Instrument Requirements: Any stock, but the news must be significant.
• Time Restrictions: The trade must be initiated within the first 5 minutes of resumption.
• Chop/News Avoidance: The trade is a direct result of news.

Context Framework

• Trend Direction: The news creates a new trend.
• VWAP Relationship: Will be far above the pre-halt VWAP.
• MA Relationship: Not relevant in the immediate aftermath of the halt.
• Range Location: Will be at a new multi-day or multi-month high.
• Higher TF Alignment: Not relevant.

Trade Management Rules

• Breakeven: Move stop to entry after a 5% gain.
• Scale Out: Take profits into the initial surge of momentum.
• Add Size: Never.
• Fast vs Slow Moves: This is always a fast move.

Time Rules

• Optimal Window: The first 5 minutes after the stock resumes trading.
• Times to Avoid: After the initial momentum has faded.
• Session Notes: Halts can occur at any time.

Setup Classification

• A+ Criteria: A buyout offer or FDA approval for a major drug.
• A Criteria: Strong positive earnings or a significant contract win.
• B Criteria: Ambiguous or minor news.
• C Criteria: Any halt on negative news.

Market Selection Criteria

• Instruments: Common stocks.
• Volume/Liquidity: Must have sufficient liquidity to handle the post-halt surge.
• Volatility: Extreme.

Statistical Edge Metrics

• Expected Win Rate: 50-60%.
• Average Win Size: 15-30%.
• Average Loss Size: 5-7%.
• Profit Factor: 3.0+.
• Expectancy: High.

Failure Conditions

• Market Conditions: The news is misinterpreted by the market, or it's a "sell the news" reaction.
• Specific Scenarios: The initial pop is faded by sellers who were trapped before the halt.

Psychological Rules

• Mental Discipline: Must be able to read and interpret the news catalyst quickly and act decisively. Avoid chasing if the initial entry is missed.

Advanced Components

• Market Regime Detection: Not applicable.
• Filters: Have a news feed and halt alerts integrated into your trading platform.
• Correlation: Not a factor.
• MTF Alignment: Not applicable.

Location

• Where Strongest: On truly transformative news for the company.
• Where Weakest: On ambiguous news or in a stock with a history of fading news-driven pops.