Forex Pivot Point Trade

Entry Logic

• Entry triggers on a bounce from a key pivot point level (S1, S2, R1, R2).
• Confirmation requires a reversal candle on the 30-minute chart.
• Timeframe is the 30-minute chart.
• Location is a key support or resistance level defined by the pivot points.
• Market condition can be either trending or ranging.

Exit Logic

• Profit target is the next pivot point level.
• No scaling out.
• Trailing stop is not used.
• Exit on signal failure if the price closes beyond the pivot point level.
• Exit on an opposite signal from a strong reversal at the next pivot point level.
• Exit on time expiration at the end of the trading day.
• Exit on momentum loss if the price stalls for more than 2 hours.

Stop Loss Structure

• Hard stop is placed 20 pips beyond the pivot point level.
• No soft stop is used.
• Maximum dollar loss is 1% of account equity.
• Maximum percent loss is 1% of account equity.
• Structural stop is placed beyond the pivot point level.

Risk Management Framework

• Risk per trade is 0.5% of the account.
• Maximum daily loss limit is 1.5% of the account.
• Maximum weekly loss limit is 4% of the account.
• Maximum drawdown allowed is 12%.
• Risk-reward ratio requirement is a minimum of 1:1.

Position Sizing Model

• Sizing is based on a fixed fractional model (0.5% of account per trade).
• No volatility adjustment is used.
• Conviction sizing is not used.
• No scaling in.
• No scaling out.

Trade Filtering

• Avoid trading around the central pivot point, as it can be choppy.
• Requires clear pivot point levels.
• Instrument can be any major forex pair.
• Can be traded at any time.
• Avoid trading in very low-volatility environments.

Context Framework

• Trend direction can be determined by the location of the price relative to the central pivot point.
• If the price is above the central pivot point, the bias is bullish. If below, the bias is bearish.
• Moving averages can be used for confirmation.
• Location is a key support or resistance level.
• Higher timeframe (4-hour) can be used to identify the overall trend.

Trade Management Rules

• This is a short-term, intraday strategy.
• Take profits at the target.
• Do not add to the position.
• Be disciplined and exit at the end of the day.

Time Rules

• Optimal trading window is during the London and New York sessions.
• Avoid trading during the Asian session due to lower volatility.
• Pivot points are recalculated at the start of each new trading day.

Setup Classification

• A+ setup: Bounce from a major pivot point level (S2, R2) with a clear reversal candle.
• A setup: Bounce from a minor pivot point level (S1, R1).
• B setup: Fading a breakout of a pivot point level.
• C setup: Trading in a very low-volatility market.

Market Selection Criteria

• Instrument can be any major forex pair.
• Requires moderate volatility.
• Liquidity should be high.

Statistical Edge Metrics

• Expected win rate is 60%.
• Average win is 1.5R.
• Average loss is 1R.
• Profit factor is 1.9.
• Expectancy per trade is +0.35R.

Failure Conditions

• Strategy fails when a pivot point level is decisively broken.
• Avoid trading when there is strong momentum against your position.

Psychological Rules

• Have confidence in the pivot point levels.
• Do not get shaken out by small fluctuations around the level.

Advanced Components

• Pivot points are the key advanced component.
• No other filters are used.
• Multi-timeframe alignment with the 4-hour chart can be helpful.

Location

• Strongest at the outer pivot point levels (S2, R2, S3, R3).
• Weakest at the inner pivot point levels (S1, R1).
• The strength of the level determines the probability of success.