Built For
Instruments: Stocks/Options/Futures
Trading Style: Day Trading
Playbook Overview
This strategy is built around a simple yet powerful concept: when the price breaks above or below a major level, like the previous day's high or low, it often pulls back to retest that same level before continuing in the original direction. The trade isn’t taken on the breakout itself, but on the retest, inside what’s known as the battle zone.
The battle zone is where execution happens. It’s the pullback area where you have to watch for clear confirmation before entering.
At the same time, you have to define the area where you don’t want to trade. That’s where the No Trade Zone (NTZ) comes in. You’re looking for the range where price is likely to chop around, trap traders, and offer no real edge.
Most of the time, this will be the area between the previous day's high and the premarket low, but it won’t always be the same. You have to look at the chart and identify where the market is likely to be indecisive.
The combination of waiting for a clean break, watching how the price behaves during the retest, and staying out of the NTZ is what makes this setup effective. It’s a structure-based strategy that rewards patience and discipline, not anticipation.
Playbook Rules
Mark the Key Level
Identify a major prior level, often the previous day’s high or low, premarket high/low, or supply/demand zone. This becomes your reference point.
Wait for a Clean Break
Wait for a break of the level. Do not enter during the break. The setup starts with the pullback.
The Retest – The Battle Zone
Wait for the retest of the zone. This is the critical area where execution happens.
Watch how price behaves:
- For longs: look for bullish wicks and strong closes above the level.
- For shorts: look for rejections and failed pushes back above the level.
Confirmation Candle
Entry is taken after a clear signal, typically a candle that wicks into the level and closes in your direction (bullish for longs, bearish for shorts).
Closes below the level for shorts, or above the level for longs.
Stop Loss and Target
- Stop is placed just beyond the invalidation point (below the level for longs, above for shorts).
- First Target (TP1) is the prior high (for longs) or prior low (for shorts).
- Once TP1 is reached, take partial profits, usually 25–50% of the position.
- Hold runners as the move continues.
No Trade Zone (NTZ)
Mark the NTZ, this is usually the range between the previous day’s high and the premarket low. It won’t always be those exact levels, but the idea is the same: find the range where price is likely to chop.
Avoid trading inside this zone. There’s no edge here, wait for a clean break and retest outside the range before taking action.
Pros and Cons of the Strategy
This model is designed to deliver high-quality, repeatable setups — but like any trading method, there are key things to understand before using it.
Note: The cons listed here aren’t disadvantages. They are things to be aware of — important characteristics that require patience, discipline, and proper management to make the model work effectively.
Pros
- High Probability Setup: The setup filters out chop by waiting for a clean break and retest outside of a defined range.
- Clear Risk Management: Stop loss is always placed just above or below the retest level — no guessing, no wide stops.
- Prevents Chasing: Forces discipline by never entering on the break — avoids getting caught in fakeouts.
- Repeatable Process: Same structure every time: mark levels, wait for break, confirm retest, execute. Nothing changes.
- Works Across Timeframes: Applies to both intraday setups and swing trades — same logic, same execution.
Cons (Things to Be Aware Of and Manage)
- Requires Patience: Many trades don’t retest right away — some just break and go. You have to be okay with missing those.
- Can Miss Fast Moves: By not entering on the break, you’ll sometimes miss big runners that never come back.
- Needs Precise Execution: Entry must be clean off the level. If you hesitate or chase late, the risk-reward gets skewed.
- Choppy Retests Can Confuse: Not every retest is clean, you need to be experienced in reading candle behavior during the battle zone.
Trade Breakdown
NQ Short
Mark Previous Day High
Mark the previous day's high before the market opens. This becomes a key level of interest.
Mark Premarket Low
Mark the premarket low once the range is clear. Price is now trading between the PDH and PML.
Price Opens Below PDH
Price opens and consolidates below the previous day's high. No trades are taken during this period.
Define the No Trade Zone (NTZ)
The zone between the previous day's high and premarket low is the NTZ. No trades are considered inside this range.
Wait for the Break
Wait for the price to break below the premarket low with strong momentum.
Do not enter during the break. Chasing here increases the risk of getting trapped in a fake move.
Wait for the Retest — The Battle Zone
After the break, wait for the price to pull back and retest the level. This is the battle zone, where confirmation is required before taking the trade. Price must hold below the level and show signs of rejection.
Entry and Stop
Enter short once confirmation appears (e.g. rejection candles, bearish engulfing, wicks into the level with no closes above).
Place the stop just above the wick high of the retest structure. If the price closes above that level, the setup is invalid.
Target
Set TP1 at the most recent intraday low.
Once TP1 is hit:
- Take off 25–50% of the position
- Reduce risk
- Lock in partial profits
Hold the remaining position for continuation.
