Fibonacci Pivot Trade

Entry Logic

Enter long when price closes above a Fibonacci pivot level (e.g., S1, S2, R1, R2) after a clear retest and rejection. Confirm with a bullish candlestick pattern. Use a 5-minute timeframe for entry. Price must be above the daily VWAP. Market condition must be trending.

Exit Logic

Target the next Fibonacci pivot level. Scale out 50% at the first target. Trail stop with the 20-period EMA on a 5-minute chart. Exit remaining position if the 20-period EMA is breached. Close all open trades 15 minutes before market close.

Stop Loss Structure

Place hard stop 5 ticks below the retest low. Max dollar loss is $100 per trade. Max percent loss is 0.5% of account equity. Structural stop is below the previous swing low.

Risk Management Framework

Risk 1% of account per trade. Daily loss limit is 3% of account. Weekly loss limit is 6% of account. Max drawdown is 10%. Require a minimum 1.5:1 R:R.

Position Sizing Model

Size based on a fixed dollar risk per trade ($100). Adjust size down for high volatility instruments. Increase size by 10% for A+ setups. Scale in 50% on initial entry, 50% on confirmation of break.

Trade Filtering

Trade only instruments with average daily volume over 5 million shares. Avoid trading during major news announcements. Avoid choppy markets (ATR < 0.5% of price). Trade high momentum stocks.

Context Framework

Trade in the direction of the daily trend. Price must be above the 50-period moving average on the 15-minute chart. Price should be trading in the upper or lower third of the daily range. Higher timeframe (60-minute) must confirm trend.

Trade Management Rules

Move stop to breakeven after price moves 1R in profit. Scale out 50% at 1.5R. Add size if a higher low forms after a pullback in a strong trend. Aggressively manage fast-moving trades.

Time Rules

Optimal trading window is 9:30 AM to 11:30 AM EST. Avoid trading between 12:00 PM and 1:00 PM EST. Avoid trading in the last hour of the session.

Setup Classification

A+: Clear retest of a major Fibonacci pivot (S1/R1). Strong bullish/bearish candle confirmation. High volume. A: Clear retest of a minor Fibonacci pivot (S2/R2). Good confirmation. Moderate volume. B: Retest of a Fibonacci pivot with weaker confirmation. Average volume. C: Weak retest, poor confirmation, low volume. Avoid.

Market Selection Criteria

Trade highly liquid stocks (e.g., SPY, QQQ components). Volume must exceed 1 million shares in the first 30 minutes. Volatility (ATR) must be above 1% of the instrument's price.

Statistical Edge Metrics

Target 55% win rate. Average win $150. Average loss $100. Profit factor 1.65. Expectancy $32.5 per trade.

Failure Conditions

Price fails to hold the pivot level after retest. Confirmation candle is weak or reversed. Volume is low on the breakout. Market condition shifts to range-bound.

Psychological Rules

Maintain composure after losses. Stick to the plan. Do not chase trades. Review losing trades objectively.

Advanced Components

Use ADX > 25 to confirm trend strength. Filter for instruments with high correlation to the S&P 500. Ensure 15-minute and 60-minute charts align with the 5-minute trend.

Location

Strongest when price retests S1 or R1 in a strong trend. Weakest when price is consolidating around the central pivot.