A trade framing lens that looks at 2 hour candles for a 10 day lookback period.  This provides 40 data points which provides enough data to use descriptive stats and identify critical states.  The 2-hour candle component reduces some of the noise inherent in faster time periods.  Also used to describe a time frame of 10 min candles and 2 day look back.  Use both timeframes and chart dimensions for assessing swing trades.

The 123 entry happens after an unambiguous directional move that makes a clear reversal pattern in the other direction.

Reference: Foundation Course

Videos: https://www.youtube.com/watch?v=XLfEwuuFqpc

See also Universal Entry

What to do when price approaches the +2R level as a routine play.  Considers protected profits, exit / re-entry, scaling up as well as being surprised into the trade if the price continues to move favourably.

Reference: Foundation Course

Videos:  https://www.youtube.com/watch?v=2F1Zv5955RE&t=1s

https://www.youtube.com/watch?v=hQ_l2-Nma4Q

Ken's rule of thumb criteria for entering a second position in a positive trade.  Criteria for entering a third position are 6R in hand plus momentum.

Momentum is confirmed by looking at a momentum indicator such as the Moving average convergence divergence (MACD), a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. See: 2R battle drill for more details.

Trading is not to stick around and eat a two ATR loss but to stop and reverse if the execution risk box is violated. For example, a 5DD trade switches to a 5DDF trade if the original hypothesis is violated.

Reference: Foundations QAw01 20210411 (15:01)

2xATR is the default initial Position sizing Risk for swing trades.   This value should be adjusted based on calculations as the skill of the trader increases.

Reference: Advanced SwingTrading Course

The amount of money in your trading account, e.g., $100,000. Synonymous with Portfolio Size.

The MMRB is a boxed region on the chart that defines the minimum amount of risk you must be willing to take on a trade, based on logical price structure and system parameters. It sets the boundaries for your entry and stop.

The amount of money in your trading account, e.g., $100,000. Synonymous with Account Size.

The amount of dollars for a specific tradeable in the trade or units of standard risk. Good trade management determines the position size by considering the Risk and Portfolio Size.

In owl speak, a measure of risk and profit in a trade. R represents the initial risk on a trade; the distance between your entry price and your stop-loss. If you risk $100 on a trade, that is 1R - regardless of your account size or position size. If you make $200 in that trade, you’ve made 2R. Using R in this manner makes it a universal measurement of your system performance regardless of whether you are trading with a $10K account or $1M account.

The amount of money you can lose in the trade. See also R.

Risk management is the structured process of limiting losses, sizing positions, and protecting your edge, so that no single trade—or series of trades—can destroy your account, your mindset, or your ability to learn. In the Owl Group framework, risk management is the discipline of protecting your capital, confidence, and clarity—so that you can stay in the game long enough to develop true mastery. It’s not about avoiding loss; it’s about controlling the size and impact of losses so they become manageable tuition, not terminal setbacks.

Expectancy: is the average amount you expect to gain or lose per trade, based on your win rate, average win size, and average loss size—measured in R units. Expectancy=(Pwin​×Ravg win​)−(Ploss​×Ravg loss​).

Where:

• Pwin​ = Win rate (as a decimal)

• Ravg win​ = Average win in R

• Ploss​ = Loss rate = 1−Pwin1

• Ravg loss = Average loss in R (typically 1R)

Example

• Win rate: 50%

• Avg win: +2R

• Avg loss: -1R

Expectancy=(0.5×2)−(0.5×1)=1−0.5=+0.5R

That means you earn +0.5R per trade on average.

Expectunity: is the strategic combination of a system’s expectancy and its opportunity frequency—measuring not just how much you make per trade, but how often you get high-quality trades. Even a system with high expectancy (e.g., +1.2R per trade) may be impractical if it only occurs once a month. Likewise, a system with frequent trades but low or negative expectancy will slowly bleed capital. Expectunity = Edge × Flow. It answers: “How often can I apply my edge with confidence and precision?”

Trade Framing is the deliberate act of building a trade plan (aka frame) around a setup, defining the entry, stop loss, target, risk, and reward—using visual tools like the MMRB and R-math to decide if the trade is worth taking.

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In the Owl Group framework, trade framing is the process of visually and mathematically defining the trade before taking action. It answers the questions:

Where do I enter? Where do I exit if wrong? Where is the reward? What is the risk? Is it worth it?

It is the core skill that connects your system to the market through your self-awareness—before emotion or randomness enters the picture.

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Where is the entry? “Above VWAP when RL10 turns up.

Where is the stop (1R risk)? “Below the MMRB at prior swing low.”

Where is the target (reward)? “Next Z2 boundary or resistance zone.”

What is the reward-to-risk ratio? “Framed for at least 2R”

What conditions would invalidate it? “If price breaks below RL270, trade is void”

Is it in a critical State? “Yes, Z3 Pinch just broke upward”

Trade management is the live decision-making process that begins after a trade is entered, guiding how you monitor, adjust, or exit based on evolving market behavior and internal conditions.The actions taken when in a trade to manage the trade such adding more, or exiting some or all or continuing to hold after checking some measures. “Entry gets you in the arena. Trade management determines who leaves with the prize.”

A specific tradeable that passes your criteria for being a candidate to be traded.

A specific symbol - stock, ETF, futures, Forex etc. that is available on an exchange and can be traded. specific symbol - stock, ETF, futures, Forex etc. that is available on an exchange and can be traded.

Average True Range expressed as a percentage of price