Pre-Entry Filters

Where this fits. The chase-protection layer inside TradingApp. Both filters run automatically on every order before the submit button activates. The trader cannot bypass either rule for standard strategy types — only the explicit reversal and position-trade modes skip them, by design.

What they do

Two filters run in series on every proposed order, evaluated against the broker snapshot at the moment the trader prepares to submit. Both have to pass for the order to be allowed through.

Rule A — Day-range filter. The proposed entry price is compared against the day's high or the day's low (whichever is closer in the direction of the trade). If the entry is more than 60% of the average true range away from the relevant day extreme, the filter blocks the submit. The intuition: if the day has already printed a 4-ATR move from your entry, you're not buying a setup — you're chasing.

Rule B — Extension filter. The proposed entry is compared against the 50-day simple moving average. If the entry is more than 4.0 × ATR above the 50DMA, the filter blocks the submit. The intuition: a stock that's already four standard daily ranges above its 50-day average is in a structural state where new long entries fail more often than they work. The pattern might still be valid, but the math doesn't.

The submit button is disabled until both filters return green. The trader cannot click through them — only re-evaluate the entry price or pass on the trade.

What it costs

Both filters fire on real setups some of the time. A stock breaking out at the open with strong volume might be 4.5 ATR above the 50DMA — a perfectly valid trade that the filter blocks. This is a real cost, and it has to be priced in.

The trade-off is asymmetric and favors the filters. The trades that get blocked include the rare valid breakout-from-overextension AND the much more common chase-after-the-move-already-happened. The first category is small; the second is large. Blocking both removes more bad trades than missed good ones.

The trader who can't tolerate missing the occasional fast-extending breakout shouldn't use these filters. The trader who's noticed they lose more on chased entries than on missed extensions should.

Why this beats discretion

Discretion at the moment of entry is unreliable. The trader who calmly decided pre-market that they wouldn't chase ends up chasing in real time because the price is running and the chart looks great and the feeling is that this one is real. Statistically, the feeling is wrong more often than it's right — but it doesn't feel wrong.

A mechanical block doesn't argue. The button is grey, the order doesn't submit, the trader either re-prices or moves on. There is no negotiated bypass, no "just this once," no chart-based justification. The filter doesn't know what the chart looks like; it only knows how far the entry sits from two structural levels.

That's the design. Discretion at high-volatility moments tends toward error; mechanical blocks at the same moments don't.

Where the filters don't apply

Two strategy types skip both filters by design:

• Dead-cat-bounce trades. These are explicit bottom-reversal plays where the entry IS at the day's low. The whole point is to enter at the extreme, so a day-range filter would block every valid setup. Sizing is fixed at 0.5% of net liq regardless.
• Position-trade entries. These are multi-month holds with structural stops at the 5-day-low or 50-week MA. The 4-ATR-above-SMA50 check is conceptually wrong for that timeframe — long-term positions are often initiated when the stock is already extended.

Both bypasses are deliberate, declared at order entry, and apply only to those specific strategy types. Everything else routes through Rule A and Rule B.

How to think about it

The filters exist for the same reason the order page has a confirmation dialog: most trading mistakes are not analytical errors but execution errors made in the moment. The chart was right, the candidate was real, the regime was constructive — but the entry was wrong because the trader paid too much for it.

Rule A and Rule B don't make the trader smarter. They prevent the dumbest version of the trader — the one chasing a price that's already moved 4 ATR — from being the one that places the order.