Hey now. I'm going to show you another profitable trading system that I call
Rebound and Pivot. Then I'm going to test it 100 times in a row and review the results.
Just make sure you crush that subscribe button like it owes you money. Right now!
Rebound and Pivot uses 3 indicators. The 1st indicator to place on your chart is
the freely available Dynamic Structure Indicator by ZenAndTheArtOfTrading.
This indicator will be used to confirm entries and set our stop loss level. I'm
going to leave all inputs at default. However, I'm going to change the setting style for R1,
R2, S1, S2, PS1, PS2, PR1, PR2 from lines with breaks to circles; so it is easier to see.
The 2nd indicator is the built-in TradingView study,
Exponential Moving Average. I'm going to set this EMA to the Fibonacci number of 55 and color it in
orange. This indicator will act as our trigger where price will rebound to and pivot from.
The 3rd and final indicator will be the good 'ol 200 EMA colored in white.
Once again this will confirm trend direction. Now let's get to the charts this chart.
This is Euro versus the US Dollar. The rules for a long entry on Rebound and Pivot are:
1st price closes above the 200 EMA. 2nd price then comes above and then comes back in
to the 55 EMA. 3rd enter when the price rebounds and pivots off of the 55 EMA.
All of that happens on this candle here. Wait for the close of the candle. And that will be our
trigger. We place our stop at the lowest support zone in green on the Dynamic Structure Indicator
and we're going to target 1/2 of our position at 1:1. When 1:1 is hit we are going to move our
stop to breakeven and target 2:1 for the rest of our position. And this one hits target 2.
We have one more long example.
Price is above the 200 EMA. Price closes above and then comes back into the 55 EMA.
Price pivots and rebounds off of the 55 EMA. And you wait for the close. This is our trigger.
Place our stop at the lowest green circle and target 1:1 for the first 1/2 of our position.
When 1:1 gets hit we move our stop to breakeven and let the other 1/2 ride
to 2:1. And the 2nd 1/2 of this one stops out at breakeven. And now we flip the shorts.
This is what I will test for shorts. 1st price to be below the 200 EMA.
2nd price to close above and then back into the 55 EMA. That's the pivot and rebound.
3rd price to close below the 55 EMA. This is our trigger candle. We place our stop at the
red circle of the Dynamic Structure Indicator and target 1:1 for 1/2 our position. When target 1 is
hit we move our stop to breakeven and target 2:1 for the remainder. And this one hits 2:1.
I'm going to show you 1 more short example. Again we have price under the 200 EMA. Price
then comes above and closes below the 55 EMA. This is our trigger candle.
Place our stop at the top of the red box, and target 1:1. When 1:1 is hit we move
our stop to breakeven and let the rest either ride to 2:1 or stop at breakeven.
And this one hit 2:1. Stick around to the end of this video where i give my thoughts on
making the strategy better, and give it a Trader's Landing score. And now it's time to do what i do.
Remember this is just 100 tests on one instrument. If you're thinking of using
the system please do all the required testing and be sure to let us know what you discover.
Now let's review the test data and go over a couple of ideas on how to optimize this system.
This test was done on the Euro vs, the US dollar on the 1-hour time frame. It took 14
months to find our 100 setups. 71 hit target 1, 44 hit target 2, and 29 stopped out, for a
winning percentage of 71%. Gain on account if you took all of those trades would have been 50.5%.
The equity curve here is quite impulsive with one extended period of consolidation.
I'm going to give the Pivot and Rebound system a Trader's Landing score of 8
due to the huge potential for optimization using this system.
So how do we find the crumbs to optimize and make this system better? I like using the
Dynamic Structure Indicator as a non-subjective stop loss level. So maybe instead of a 55 EMA
as your trigger, you could use something like the SSL Channel. For more information on that
be sure to check out this video where I test out a custom SSL Channel. 2nd a lot of the losses in
a row happen when you would still be in a trade. So many of the losses would have been filtered out
and the gains would have been much higher if those setups were not taken into account. But there were
also a few winners where the same is true. So a general optimization in those cases is just to
look for clear pullbacks which I understand is subjective but, if you're honest with yourself,
or if you use the replay feature, you will see the positive results for yourself.
Check out this playlist for more profitable systems. And have a great day, if you want to.