Weekly Pivot Point Strategy [Breakout]
Weekly Pivot Point Strategy. Pivot points drawn based on weekly OHLC are similar to daily pivot points except the fact that they are calculated based on the OHLC candle of a week and their plot lines are drawn over an entire week lasting Monday to Friday.
Pivot points drawn weekly can be used for a very good swing trading strategy. This makes our trading system very similar to day trading except the fact that our day lasts for the entire week.
Indicators used in this system will be same as our pivot points intraday strategy.
Pivot Points: A widely popular indicator that comes inbuilt in most trading platforms. It shows support and resistances as S1, R1, S2, R2 etc and has a central line known as pivot line. We will be using this for setup and entry.
SMA: Moving average another popular indicator that shows us the trend of the instrument at the moment. We will be using this for setup and exit.
We will have 3 setups in this strategy, Long, Short and Neutral. The timeframe used is half hours.
- Neutral Setup: On Monday or whatever in the first trading day of the week in case Monday is a holiday, the first candle half hour candle will be neutral. No trades will be placed in first half hour.
Apart from the time setup also price being below 50 SMA and above pivot is a neutral setup. Price above 50 SMA and below pivot is a neutral setup. No trades are placed in neutral setup.
- Long Setup: Any time after the first half hour when price is above 50 SMA and also above the pivot line is a long setup.
- Short Setup: Any time after the first half hour when price is below 50 SMA and also below the pivot line is a short setup.
Remember our setups will keep changing and so does our entry orders need to be adjusted.
Entries are very simple in this. This is a breakout trading system so we use SL orders for entry as limit orders wont work. Either that or wait for breakout to happen and then place order manually. I go for the SL orders instead of observing the market tick by tick.
- Neutral Setup: Do nothing
- Long Setup:
Buy order above R1 if price range is below R1
Buy order above R2 if price range is below R2
- Short Setup:
Sell order below S1 if price range is below S1
Sell order below S2 if price range is below S2
Risk has been be based on individual appetite. My advise is to paper test and check out drawdown with different risks and then take a decision based on the risk that you can work with.
Position Size will be a factor of risk and stop loss.
Exit to the system will be trailing the 50 SMA line. No targets will be used.
What actually works for this system is that the trailing stop loss keeps moving up aggressively so you can take higher risks in this, because its going to be rare when your loss equals to the entire risk.
You can find a detailed video description for the system below. Do not forget to subscribe to our channel for more such updates on new trading strategies