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 T1

Slope:  Setups will typically occur with low to no slope (aka sideways), but are stronger if occurring with significant slope (albeit rare).

Position:  Best when occurring infrequently / with great separation between trade setups; rarely will setups trigger within 30min of one another.  The stock may not traverse more than 0.25 StDev below the VWAP during initial VWAP intersection; entry must be no more than 0.5 StDev above the VWAP.

Target:  First target is the +1 StDev band (at which I recommend taking 1/2 of position off), second target is left to trader’s discretion (as a successful T1 trade will result in breaching of the +1 StDev band, crossing into the ‘Fast Lane’, and range-expanding aggressively — thus, the trader is encouraged to leave a remaining portion of the position on, trailing stop loosely [0.5-1.0 StDev as the stop width] so as to capture breakout potential).

Stop:  Initial stop placed below the swing/local short-term low at which a T1 setup has been identified, no greater than 0.5-1.0 StDev from entry (depending on risk tolerance of trader).




More T1 chart examples here

T2

Slope:  Setups typically occur with moderate to strong slope (though a variation of T2 will appear when slope transitioning from flat/unsloping to moderately sloping).  Best when slope increasing as price crosses into the ‘Fast Lane’ and continues to build as trade develops.  As usual, preference given to stronger slopes relative to flat/unsloping setups.

Position:  Setups may occur with relative frequency; no 30min restriction exists as with T1 trades.  The stock may not traverse more than 0.25 StDev below the StDev band during initial intersection; entry must be no more than 0.25 StDev above the StDev band.

Target:  With rapid range expansion, the best estimate of a target would be 2.0x the StDev distance from entry (ex: if entering at the +1 StDev [100.50 relative to a 100.00 VWAP level], your target would be 2.0x (100.50 – 100.00) from entry.  Therefore, 100.50 (entry) + (2 x .50; two times the StDev width) = $101.50 target.  Trailing/discretionary exit is perfectly fine.

• Stop:  Initial stop placed below the swing/local short-term low at which a T2 setup has been identified, no greater than 0.5-1.0 StDev from entry (depending on risk tolerance of trader).

More T2 chart examples here

T3

Slope:  Flat or decaying slope preferred; slope must not be greater than 10 (i.e. no extreme upsloping environments).

Position:  Best when occurring infrequently / with great separation between trade setups; rarely will setups trigger within 60min of one another.  The stock may not traverse more than 0.25 StDev above the StDev band during initial intersection; entry must be no more than 0.25 StDev below the StDev band.

Target:  First (and only) target is the VWAP itself, though occasionally a T4 (‘Cross’) setup will appear if the reversion is strong enough so as to cause regime change (change in control, from buyers to sellers) and no T1 (‘Test’) setup transpires.  As with all VWAP-based trades, keeping 1/2 or 1/3 position in the event of a massive windfall trade is highly recommended if buying power/available capital allows.

Stop:  Initial stop placed below the swing/local short-term low at which a T3 setup has been identified, no greater than 0.5-1.0 StDev from entry (depending on risk tolerance of trader).

More T3 chart examples here

T4

Slope:  Flat or decaying slope preferred; slope must not be greater than 5 (i.e. no moderately upsloping environments).

Position:  Best when occurring infrequently / with great separation between trade setups; rarely will setups trigger within 60min of one another.  The stock may not traverse more than 0.25 StDev above the StDev band during initial intersection; entry must be no more than 0.25 StDev below the StDev band.  Simply put, DON’T CHASE ENTRIES.

Target:  First target is the -1 StDev band (at which I recommend taking 1/2 of position off), second target is left to trader’s discretion (as a successful T4 trade will result in breaching of the VWAP, crossing into the ‘Slow Lane’ and eventually the opposing ‘Fast Lane’, and range-expanding aggressively — thus, the trader is encouraged to leave a remaining portion of the position on, trailing stop loosely [0.5-1.0 StDev as the stop width] so as to capture breakdown potential).

Stop:  Initial stop placed below the swing/local short-term cross at which a T4 setup has been identified, no greater than 0.5-1.0 StDev from entry (depending on risk tolerance of trader).