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Developing a system #24 (Pivot points - 25% rule)

Submitted by Neil

Hi Edward,

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.

Regards

Neil.



Hi Neil,
What tf are you working with? and do you mean you trade with the crossing of the midpoint between PP and S1 and S1 and S2?

It would be great to give your illustration by way of a chart.

Neil or Edward, can you please explain it with the help of a chart

very clear explanation.. But Neil, I have seen that more often it doesn't go to a s1 or r1 and return back so taking the 25% is gone is losses.. by moving towards s1, its not so safe to enter into a trade when 75% of the move has already occurred... any explanation on my worries plz?

Neil it seems to be a good strategy...do you have some rough percentage of the winning trades..also, which pairs it works best with.
EUR/JPY, GPB/JPY i recon are good pairs ..need to know your thoughts on it. I am really interested in this strategy and thanks for sharing it
fahd

This method is working on trending market only.. You will be in trouble when you apply this in side trending

This technique is best applied during sidline trending market in my observation. You will be in trouble if you apply them in strong downtrend/uptrend market. For a trending market, pending limit order to be placed at every support and resistance (derived from daily pivot calculation). Close at today pivot point or if it doesnt close today, close at the next pivot point.

cheers
KMD

Here is a very priceless peice of advice. Always make sure you calculate your weekly and monthly pivot points. Checkout eur/usd move for this past week[11/10/2010 - 15/10/2010]
If you had your weekly and monthly pivot pionts before hand, you would have profited nicely. Prices moved between monthly resistance 1 and weekly resistancd 1.

Best regards
Jr

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