Setup Idea

This is “knife catching” — a long after an extreme dump (10%+ in one minute). Such a flush is usually driven by panic, stop cascades, and forced position closures. After these events, the market can sometimes produce a fast technical bounce of 1–2% or more.

The key principle: we don’t buy the fall, we buy the moment when the selling stops pressing. This is not “calling the bottom.” It’s a short-term trade on normalization after an extreme event.

Important: this strategy is not for beginners. You cannot “just sit through it,” and you cannot pretend the downside risk is unlimited.

Disclaimer (Read This First)

• This is not a core setup. It’s an extreme regime where the market can continue dumping in waves.
• No averaging down. Do not add on every next “knife” and blow up the position. That’s the main way people get wiped out.
• A time stop is mandatory. If the bounce doesn’t start, you exit.
• If the trade goes against you, it’s often better to hedge (reduce directional exposure) than to hope and increase size.

What You Need on TradingView

Timeframes:

• 1m for execution
• 5m for context
• (optional) 15m to confirm the whole market isn’t collapsing

Indicators:

• VWAP
• Volume
• RSI 14

Data:

• Open Interest (OI)
• Premium Index
• Funding (from the exchange / widget)

Conditions (Checklist)

Required

• Your screener triggers Dump ≥ 10% (60s)
• Signs of “climax”: a strong volume spike / a large impulse candle
• A clear pause in the sell-off: price stops making a new low every minute
• Premium Index stops deteriorating (stabilizes or starts moving toward 0 is a plus)

Hard No’s (Most Important)

• The whole market is dumping in sync (BTC/ETH are cascading and alts are dominoing) → do not catch knives
• OI is rising hard into the drop while Premium keeps worsening → often continued pressure
• No pause / no stabilization → this is just a falling market

Optional (Improves Quality)

• RSI14 is deeply oversold and starts lifting
• OI starts declining (often means leverage is being flushed/closed)
• There is a visible historical level where price has bounced before

How to Enter Manually

Rule: enter only after proof that the knife has “gone dull.”

1. Let the flush happen (Dump ≥ 10%) — do not jump in during the first seconds
2. Wait for a pause:

• minimum: 2–3 consecutive 1m candles without a new low

1. Enter long:

• on the first reasonable push up after the pause, or
• after a mini-structure higher low forms on 1m
• (Entering “market at the bottom of the candle” is forbidden — that’s gambling.)

Invalidation (When the Setup Breaks)

To keep risk real, you need a strict manual exit rule:

• Price makes a new low below the flush low and keeps printing lower lows
• Premium Index starts deteriorating again while price remains weak
• No bounce appears within a reasonable time (see time stop)

Take Profit (Short Targets, Matching Your Model)

• TP1: +1% (close 60–80%)
• TP2: +2% (close the remainder)
• Alternative: one take profit at +1.5%

Time Stop (Mandatory)

If the market does not produce an upside impulse within 5–15 minutes after entry — exit.

Knife catching without an impulse quickly becomes “holding a knife,” which is not your model.

Risk Management (Strict)

• Position size must be smaller than in your standard setups.
• Do not average down. Ever.
• If price moves against you, it’s better to:
• cut exposure, or
• add a hedge (e.g., partial short/perp) to reduce directional risk,
• rather than sit and hope.

Common Beginner Mistakes

• Going long while price is still falling, without a pause
• Averaging down at every new low
• Holding for hours without a time stop
• Catching knives while the entire market is collapsing

30-Second Quick Checklist

1. Dump ≥ 10% ✅
2. Pause / stabilization ✅
3. Premium stopped deteriorating ✅
4. Entry after proof (HL / pause) ✅
5. Short TP + strict time stop ✅

If any item is missing — skip the trade.

Trade Example

Screener Settings (To Catch Only Extreme Events)

• Dump (60s) ≥ 10%
• Liquidity filter: Min 24h Volume (avoid thin coins)
• whitelist/blacklist

👉 Screeners let you filter only extreme dumps, quickly validate OI and Premium Index, and open a trade in one click. But again: knife catching is not routine — it’s a specialized tool that requires discipline and a strict no-averaging rule.