Zinc Trend Follower

LMEmini Zinc is better for most retail traders. CME COMEX Zinc (ZNC) is 25 metric tons with ~$3,000+ overnight margin and $12.50/tick; it is US-listed, CFTC-regulated, and physically settled. The LMEmini is 5 metric tons with ~$700+ margin and $2.50/tick, cash-settled against the LME Official Settlement Price. Start with the LMEmini for better position-sizing flexibility and lower capital, and step up to ZNC for deeper US-listed exposure (confirm the LMEmini's tax treatment with a professional, as it is a foreign-exchange product).

Use 1-hour chart as your primary trading timeframe. Check daily chart for overall trend direction, and use 15-minute for entry timing. This multi-timeframe approach gives you context and precision.

Check ADX - it should be above 25 for a tradeable trend. Also ensure EMAs are properly aligned (Price > EMA9 > EMA21 > EMA50 for uptrend). If ADX is below 20 or EMAs are tangled, the trend is not strong enough.

A pullback entry is when you wait for price to retrace to a moving average (like EMA21) before entering in the trend direction. It's preferred because you get a better entry price, the trend is already confirmed, and you have a clear stop level.

Risk 1.5-2% of your capital per trade. For trend following, this is important because the strategy has lower win rate (35-45%). Proper position sizing ensures you survive losing streaks and capitalize when trends work.

Daily chart sets direction (only trade that way). 4-hour shows setups developing. 1-hour gives entry timing. The ideal trade: Daily trending + 4-hour pulling back + 1-hour showing resumption. Never trade against the daily trend.

Use Supertrend as a confirmation and trailing tool. Entry signal: EMAs aligned + ADX > 25 + Supertrend flips in trend direction. Trail stop: Use Supertrend line (green in uptrend) as your trailing stop. Exit when price closes beyond the Supertrend line.

Market structure is the pattern of swing highs and lows. Uptrend = Higher Highs + Higher Lows. Enter near Higher Lows (pullbacks) with stop below them. Exit when structure breaks (a Lower Low forms in uptrend).

Scale out approach: T1 (2x ATR) - exit 50%, move stop to breakeven. T2 (4x ATR) - exit 25%, trail rest with EMA21. This captures quick moves with half the position while letting the rest run for extended trends.

Accumulation: Price ranging, ADX < 20, EMAs flat. Markup: Price breaking out, ADX rising > 25, EMAs aligning bullish. Distribution: Price ranging at highs, ADX falling. Markdown: Price breaking down, ADX rising, EMAs bearish. Trend follow in Markup/Markdown only.

Score components: EMA alignment (0-5 points), ADX strength (0-4 points), Structure (0-2 points). Total max 11. Trade with score >= 7 for uptrends, <= 3 for downtrends. Size positions based on score (9-11 = full, 7-8 = 75%, 5-6 = 50%). Keep it fully rule-based with fixed thresholds - no prediction or black-box models.

Strong trending (ADX > 35): Tight trails (1.5x ATR), full size, add on pullbacks. Moderate (ADX 25-35): Standard trails (2x ATR), standard size. Weak (ADX 20-25): Wide trails (2.5x ATR), selective entries, reduced size. Ranging (ADX < 20): No trend trades.

Individual position max: 2% risk. Correlated group max: 4% risk (e.g., all base metals). Total trend exposure max: 10%. Monitor portfolio heat (sum of all position risks). Reduce or don't add when heat > 8%. Diversify across uncorrelated assets.

Key metrics: Win rate (expect 35-45%), Profit factor (target > 1.8), Avg Win/Avg Loss ratio (target 2-4x), Max drawdown, Recovery factor (Net Profit/Max DD, target > 2). Analyze by entry type, regime, and asset for optimization insights.

System layers: (1) Screening - scan universe for trend score, (2) Regime classification, (3) Entry signals with MTF alignment, (4) Position sizing with ATR and score adjustment, (5) Execution with stops/targets, (6) Management with trailing, (7) Performance tracking. Integrate all layers for systematic trading.