Momentum Trading
Enter confirmed directional moves and ride them until momentum decays.
Setup Conditions
Regime Features
get_indicators(indicator_code="dmi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)
Use ADX level and slope, normalized return, and relative volume as candidate features. Calibrate thresholds per instrument and timeframe, preferably against rolling percentiles; an ADX number is neither a probability nor a position-size instruction.
Exit Features
- Volume declining while price advancing
- MACD histogram shrinking
- RSI divergence (price HH, RSI LH)
- Candles smaller with long wicks
- ADX turning down from its recent distribution
These features are correlated transformations of the same price/volume series. Define one exit rule and test it rather than counting two features as independent confirmation.
Workflow
1. Check Regime
get_indicators(indicator_code="dmi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)
Compare current ADX and normalized return with thresholds frozen from training data. If the regime gate fails, report no trade rather than substituting another strategy automatically.
2. Get Price Data and Confirm Momentum
get_candles_around_date(symbol=<symbol>, exchange=<exchange>, interval=<interval>, date=<date>)
get_indicators(indicator_code="rsi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)
get_indicators(indicator_code="macd", symbol=<symbol>, exchange=<exchange>, interval=<interval>)
get_indicators(indicator_code="mfi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)
Record multi-bar RSI and MACD progressions, time-of-day relative volume, and objectively detected swing structure. Avoid requiring every correlated indicator unless that conjunction improves held-out net expectancy.
3. Entry
Breakout: enter on a closed-bar break beyond a predeclared buffer. Pullback: define retracement depth as a tested interval rather than a fixed Fibonacci band. Invalidate beyond the structural level plus modeled slippage and size from the stop distance.
4. Report to Orchestrator
ADX value and trend direction, RSI/MACD/volume readings, entry type, exhaustion signals, stop and target levels.
Evidence and Validation
- Treat the setup as a testable hypothesis, not a prediction. Define thresholds, entry, invalidation, and exit before evaluating outcomes.
- Calibrate on the same instrument, venue, session, and timeframe. Use closed candles and a held-out or walk-forward sample; record every variant tried.
- Include spread, fees, slippage, borrow or funding, partial fills, and latency. Reject the setup when net expectancy is not positive or depends on one narrow parameter.
- Return observed inputs, missing data, cost assumptions, entry, invalidation, exit, and a valid, watch, or no-trade status.
- Research basis: Moskowitz & Grinblatt documented industry momentum, but implementation still requires regime, liquidity, cost, and crash-risk controls.
Key Rules
- Do not map ADX directly to trade size or use a universal cutoff.
- Normalize extension and participation to the instrument, session, and timeframe.
- Predeclare whether entry is breakout or pullback; do not select retrospectively.
- Define the exit from observable price or feature conditions and test it after costs.
- Cap risk from the portfolio mandate, not from a momentum label.
Related Skills
- breakout-trading -- breakout momentum is a primary entry type
- pullback-trading -- retracement entries use pullback principles for timing
1---2name: momentum-trading3description: Define and test short-horizon directional momentum setups. Use when measuring normalized return, regime, participation, breakout/pullback entry, exhaustion exit, and transaction costs.4license: Apache-2.05---67# Momentum Trading89Enter confirmed directional moves and ride them until momentum decays.1011## Setup Conditions1213### Regime Features1415```16get_indicators(indicator_code="dmi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)17```1819Use ADX level and slope, normalized return, and relative volume as candidate features. Calibrate thresholds per instrument and timeframe, preferably against rolling percentiles; an ADX number is neither a probability nor a position-size instruction.2021### Exit Features2223- Volume declining while price advancing24- MACD histogram shrinking25- RSI divergence (price HH, RSI LH)26- Candles smaller with long wicks27- ADX turning down from its recent distribution2829These features are correlated transformations of the same price/volume series. Define one exit rule and test it rather than counting two features as independent confirmation.3031## Workflow3233### 1. Check Regime3435```36get_indicators(indicator_code="dmi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)37```3839Compare current ADX and normalized return with thresholds frozen from training data. If the regime gate fails, report `no trade` rather than substituting another strategy automatically.4041### 2. Get Price Data and Confirm Momentum4243```44get_candles_around_date(symbol=<symbol>, exchange=<exchange>, interval=<interval>, date=<date>)45get_indicators(indicator_code="rsi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)46get_indicators(indicator_code="macd", symbol=<symbol>, exchange=<exchange>, interval=<interval>)47get_indicators(indicator_code="mfi", symbol=<symbol>, exchange=<exchange>, interval=<interval>)48```4950Record multi-bar RSI and MACD progressions, time-of-day relative volume, and objectively detected swing structure. Avoid requiring every correlated indicator unless that conjunction improves held-out net expectancy.5152### 3. Entry5354**Breakout**: enter on a closed-bar break beyond a predeclared buffer. **Pullback**: define retracement depth as a tested interval rather than a fixed Fibonacci band. Invalidate beyond the structural level plus modeled slippage and size from the stop distance.5556### 4. Report to Orchestrator5758ADX value and trend direction, RSI/MACD/volume readings, entry type, exhaustion signals, stop and target levels.5960## Evidence and Validation6162- Treat the setup as a testable hypothesis, not a prediction. Define thresholds, entry, invalidation, and exit before evaluating outcomes.63- Calibrate on the same instrument, venue, session, and timeframe. Use closed candles and a held-out or walk-forward sample; record every variant tried.64- Include spread, fees, slippage, borrow or funding, partial fills, and latency. Reject the setup when net expectancy is not positive or depends on one narrow parameter.65- Return observed inputs, missing data, cost assumptions, entry, invalidation, exit, and a valid, watch, or no-trade status.66- Research basis: [Moskowitz & Grinblatt](https://onlinelibrary.wiley.com/doi/pdf/10.1111/0022-1082.00146) documented industry momentum, but implementation still requires regime, liquidity, cost, and crash-risk controls.6768## Key Rules6970- Do not map ADX directly to trade size or use a universal cutoff.71- Normalize extension and participation to the instrument, session, and timeframe.72- Predeclare whether entry is breakout or pullback; do not select retrospectively.73- Define the exit from observable price or feature conditions and test it after costs.74- Cap risk from the portfolio mandate, not from a momentum label.7576## Related Skills7778- **breakout-trading** -- breakout momentum is a primary entry type79- **pullback-trading** -- retracement entries use pullback principles for timing
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