Developing a system #24 (Pivot points - 25% rule)
Submitted by User on August 31, 2010 - 09:39.
Submitted by Neil
A great forum you have here just thought I would share a simple strategy
with you to see what people think.
First of all let me say I dont like working with indicators so this is
purely based on price.
The basis behind the strategy is to incorporate Pivot Points and take pips
between any movement between the daily PP and either S1 or R1.
Im currently testing on 5 currency pairs. My trades are put on at 00:01 GMT
as my pivot points are calculated from the previous daily candle. I aim to
take 25% of the move from the daily PP to either S1 or R1 which is the last
quarter of the move to either support of resistance.
E.g EUR/JPY Today the Daily Pivot is 124.87 and S1 is 123.58 therfore my
trade to open is 123.91. TP is S1 which is 32 Pips which it had no problem
achieving. Now the part that doesnt look so great, I figured the SL need to
be about 1.6 of the TP to give the trade some room but so far from testing
the success rate is pretty high.
The theory behind is when I see the price cross the mid point between the
daily PP and S1/R1 it gives me enough of an indication where the market is
heading so I want to take some of that move. It may be possible to open the
trade at the mid point therefore the TP would be double however I feel at
the midpoint the price can often turn around therefore I want confirmation
it is definatly past it and am happy with 25% of the move.
Sorry if the explanation isnt great but I will explain anything if need be
but its a very simple system so Im sure you'll get it.