Pivot of Pivot Reversal Strategy [MAD]

vor 19 Stunden

The Enhanced PoP Reversal Strategy is a trend-reversal trading system that uses pivot points combined with ATR (Average True Range) for volatility-based position sizing and risk management. The strategy identifies potential reversal points in the market by analyzing significant pivot highs and lows.

Key Components

1. Pivot Points (PP)
Pivot Points are significant price levels where the market has shown reversal tendencies. In this strategy, we use a "pivot of pivot" approach, which means:
- First-level pivots: Basic high/low points
- Second-level pivots: Significant turning points among the first-level pivots

Example Scenarios:

Bullish Reversal Pattern:
Price: 100 → 95 → 98 → 93 → 97 → 91 → 96
First Pivot Low: 91 (lowest point)
Second Pivot Low: 93 (higher low)
Signal: If price breaks above 97, potential long entry

Bearish Reversal Pattern:
Price: 100 → 105 → 102 → 107 → 103 → 109 → 104
First Pivot High: 109 (highest point)
Second Pivot High: 107 (lower high)
Signal: If price breaks below 102, potential short entry


2. ATR (Average True Range)
ATR measures market volatility by calculating the average range between high and low prices. It helps in:
- Position sizing
- Stop-loss placement
- Take-profit targets

Example ATR Applications:

Stock A (Low Volatility):
Price: $100
ATR: $1
Stop Loss: 1-2 × ATR = $1-2 away from entry
Take Profit: 3-4 × ATR = $3-4 from entry

Crypto (High Volatility):
Price: $30,000
ATR: $1,500
Stop Loss: 1-1.5 × ATR = $1,500-2,250 away from entry
Take Profit: 2-3 × ATR = $3,000-4,500 from entry


Market-Specific Settings

1. Stock Market Examples

Large-Cap Stocks (Low Volatility)

Timeframe: Daily
Settings:
- PP Left Bars: 6
- PP Right Bars: 4
- ATR Length: 18
- ATR Mult: 0.08
- Position Size: 0.8%
- Leverage: 3.5x
Example: Trading Apple (AAPL)
- Average daily range: $3-4
- Strategy would look for reversals spanning 3-4 days
- Stop loss typically $2-3 away from entry


Small-Cap Stocks (High Volatility)

Timeframe: 4H
Settings:
- PP Left Bars: 4
- PP Right Bars: 3
- ATR Length: 12
- ATR Mult: 0.18
- Position Size: 0.4%
- Leverage: 2x
Example: Trading a biotech stock
- Average daily range: 8-10%
- Strategy focuses on intraday reversals
- Wider stops due to higher volatility


2. Crypto Market Examples

Bitcoin (Medium-High Volatility)

Timeframe: 4H
Settings:
- PP Left Bars: 4
- PP Right Bars: 3
- ATR Length: 12
- ATR Mult: 0.15
- Position Size: 0.5%
- Leverage: 2x
Example scenario:
- BTC trading at $40,000
- ATR of $1,200
- Stop loss around $1,800 (1.5 × ATR)
- Take profit at $3,600 (3 × ATR)


Altcoins (High Volatility)

Timeframe: 1H
Settings:
- PP Left Bars: 3
- PP Right Bars: 2
- ATR Length: 10
- ATR Mult: 0.2
- Position Size: 0.3%
- Leverage: 1.5x
Example scenario:
- Alt trading at $100
- ATR of $8
- Stop loss around $12 (1.5 × ATR)
- Take profit at $24 (3 × ATR)


3. Forex Market Examples

Major Pairs (Medium Volatility)

Timeframe: 4H
Settings:
- PP Left Bars: 5
- PP Right Bars: 3
- ATR Length: 14
- ATR Mult: 0.12
- Position Size: 0.6%
- Leverage: 3x
Example: EUR/USD
- Average daily range: 50-70 pips
- Strategy looks for reversals over 1-2 days
- Stop loss typically 30-40 pips


How to Use the Strategy

1. Entry Criteria
- Wait for formation of second-level pivot point
- Confirm trend reversal with price action
- Check ATR for volatility confirmation

2. Position Management
- Use the suggested position size based on account equity
- Apply the recommended leverage
- Set stop loss and take profit based on ATR

3. Optimization Tips
- For ranging markets: Increase PP bars for better filtering
- For trending markets: Decrease PP bars for quicker signals
- High volatility periods: Reduce position size and leverage
- Low volatility periods: Can increase position size and leverage

Risk Management Rules

1. Position Sizing
- Never exceed the recommended position size
- Reduce size during major news events
- Scale out of positions at key profit levels

2. Stop Loss Management
- Always use stop losses based on ATR
- Don't move stops to break even too early
- Consider trailing stops in strong trends

3. Market Conditions
- Avoid trading during major news events
- Reduce exposure during uncertain market conditions
- Monitor correlation between different positions

vor 19 Stunden

Versionshinweise

The Enhanced PoP Reversal Strategy is a trend-reversal trading system that uses pivot points combined with ATR (Average True Range) for volatility-based position sizing and risk management. The strategy identifies potential reversal points in the market by analyzing significant pivot highs and lows.

Key Components

1. Pivot Points (PP)
Pivot Points are significant price levels where the market has shown reversal tendencies. In this strategy, we use a "pivot of pivot" approach, which means:
- First-level pivots: Basic high/low points
- Second-level pivots: Significant turning points among the first-level pivots

Example Scenarios:

Bullish Reversal Pattern:
Price: 100 → 95 → 98 → 93 → 97 → 91 → 96
First Pivot Low: 91 (lowest point)
Second Pivot Low: 93 (higher low)
Signal: If price breaks above 97, potential long entry

Bearish Reversal Pattern:
Price: 100 → 105 → 102 → 107 → 103 → 109 → 104
First Pivot High: 109 (highest point)
Second Pivot High: 107 (lower high)
Signal: If price breaks below 102, potential short entry


2. ATR (Average True Range)
ATR measures market volatility by calculating the average range between high and low prices. It helps in:
- Position sizing
- Stop-loss placement
- Take-profit targets

Example ATR Applications:

Stock A (Low Volatility):
Price: $100
ATR: $1
Stop Loss: 1-2 × ATR = $1-2 away from entry
Take Profit: 3-4 × ATR = $3-4 from entry

Crypto (High Volatility):
Price: $30,000
ATR: $1,500
Stop Loss: 1-1.5 × ATR = $1,500-2,250 away from entry
Take Profit: 2-3 × ATR = $3,000-4,500 from entry


Market-Specific Settings

1. Stock Market Examples

Large-Cap Stocks (Low Volatility)

Timeframe: Daily
Settings:
- PP Left Bars: 6
- PP Right Bars: 4
- ATR Length: 18
- ATR Mult: 0.08
- Position Size: 0.8%
- Leverage: 3.5x
Example: Trading Apple (AAPL)
- Average daily range: $3-4
- Strategy would look for reversals spanning 3-4 days
- Stop loss typically $2-3 away from entry


Small-Cap Stocks (High Volatility)

Timeframe: 4H
Settings:
- PP Left Bars: 4
- PP Right Bars: 3
- ATR Length: 12
- ATR Mult: 0.18
- Position Size: 0.4%
- Leverage: 2x
Example: Trading a biotech stock
- Average daily range: 8-10%
- Strategy focuses on intraday reversals
- Wider stops due to higher volatility


2. Crypto Market Examples

Bitcoin (Medium-High Volatility)

Timeframe: 4H
Settings:
- PP Left Bars: 4
- PP Right Bars: 3
- ATR Length: 12
- ATR Mult: 0.15
- Position Size: 0.5%
- Leverage: 2x
Example scenario:
- BTC trading at $40,000
- ATR of $1,200
- Stop loss around $1,800 (1.5 × ATR)
- Take profit at $3,600 (3 × ATR)


Altcoins (High Volatility)

Timeframe: 1H
Settings:
- PP Left Bars: 3
- PP Right Bars: 2
- ATR Length: 10
- ATR Mult: 0.2
- Position Size: 0.3%
- Leverage: 1.5x
Example scenario:
- Alt trading at $100
- ATR of $8
- Stop loss around $12 (1.5 × ATR)
- Take profit at $24 (3 × ATR)


3. Forex Market Examples

Major Pairs (Medium Volatility)

Timeframe: 4H
Settings:
- PP Left Bars: 5
- PP Right Bars: 3
- ATR Length: 14
- ATR Mult: 0.12
- Position Size: 0.6%
- Leverage: 3x
Example: EUR/USD
- Average daily range: 50-70 pips
- Strategy looks for reversals over 1-2 days
- Stop loss typically 30-40 pips


How to Use the Strategy

1. Entry Criteria
- Wait for formation of second-level pivot point
- Confirm trend reversal with price action
- Check ATR for volatility confirmation

2. Position Management
- Use the suggested position size based on account equity
- Apply the recommended leverage
- Set stop loss and take profit based on ATR

3. Optimization Tips
- For ranging markets: Increase PP bars for better filtering
- For trending markets: Decrease PP bars for quicker signals
- High volatility periods: Reduce position size and leverage
- Low volatility periods: Can increase position size and leverage

Risk Management Rules

1. Position Sizing
- Never exceed the recommended position size
- Reduce size during major news events
- Scale out of positions at key profit levels

2. Stop Loss Management
- Always use stop losses based on ATR
- Don't move stops to break even too early
- Consider trailing stops in strong trends

3. Market Conditions
- Avoid trading during major news events
- Reduce exposure during uncertain market conditions
- Monitor correlation between different positions